While investing might not be top of mind for most college students, college is one of the best opportunities to start investing. The earlier you start investing, the more time your money has to grow. Even those with just a little bit of cash can begin to build a portfolio. So here are some tips to get you started on your investing journey.
Set Your Goals
Think about where you hope to be in a few decades and then make decisions to get you there. Do your research on what kind of investments might best help you reach those goals.
Decide How Much You Can Afford 
Generally, you should have an emergency fund with at least three to six months’ worth of expenses before you start investing. You also need to consider how your portfolio contributions fit in alongside expenses like rent, groceries, and debt payments.
Know Your Investing Options
Experts say the key is to diversify, which means have a variety of investments in different things. That keeps things balanced, and if one investment is going down, another might be holding steady or going up.
- Certificates of Deposit (CDs): Similar to a savings account but your money is locked in for a fixed time period and generally earns a higher fixed interest rate. CDs are low-risk investments. Check out our CD rates.
- Stocks: When you buy a stock, you are essentially purchasing a small percentage of a company. If that corporation makes a profit, your stock will go up in value. While stocks come with some risks, it's best to think long term when investing in stocks.
- Bonds: A bond is a loan from an investor to a borrower such as a certain company. The investor accrues interest on the investment until the investor decides to cash the bond in. Bonds are typically considered low risk.
- Mutual funds: Mutual funds are managed by a professional money manager. Your money goes into a pool of investor money that is diversified toward various stocks and bonds. Risk levels with mutual funds depend on what types of accounts you're investing your money in.
- Exchange Traded Fund: ETFs are similar to mutual funds in that they are a collection of assets managed by financial experts, but they are designed to track a particular index, sector, commodity or other asset. ETFs hold a similar risk to mutual funds.
- Index Funds: An index fund is also a collection of assets, but they are attached to a specific index such as the S&P 500 or Nasdaq. An index fund holds shares of all the stocks in the index making the fund highly diversified and typically offers less-volatile returns than owning individual stocks.
Open an Investment Account
Before you start investing, you’ll need to create a brokerage account.
- Traditional brokers: Often offer a combination of online and in-person services and personalized investment advice. But they may cost more than the alternatives.
- Investment apps: Let you trade stocks, bonds, and other securities on your own
- Robo-advisors: May use a short survey to assess your risk tolerance, time horizon and goals. Then, they build a personalized portfolio, generally consisting of investment funds.
Implement A Realistic Strategy
In college, a realistic investment strategy is one you can implement in your free time, between classes and studying. Plan to check in on your portfolio on a schedule that makes sense to you, be that weekly, monthly, or quarterly. This will help you keep an eye on your performance and reassess your holdings if needed.
College students who are looking to invest should get started right away. The sooner you begin learning about the market, the sooner you can begin planning your financial future. Students can begin with modest amounts of money and hopefully grow both their knowledge and their portfolio.