As a college student, you have some unique challenges. There’s a lot on your plate between attending classes and homework, but also studying and balancing a social life, too. You should also devote time to your own wellness.
In this post though, we are not talking about physical or social wellness. Instead let’s focus on a more neglected wellness aspect – financial wellness.
Here are five easy ways to achieve that glow in your investments while being sensitive to a college student’s lifestyle.
Open an Interest Generating Savings Account or CD
Got some cash? Here are two easy, super safe ways to earn some interest:
- High yield savings account from a bank that pays you a variable interest rate.
- CD (certificate of deposit) guarantees you an interest rate if you leave your money in for a certain amount of time.
Both offer some return for your money, so they do count as investments. Be prepared to let this money sit in these accounts for a while. After a few years, you will start to see some real return, more than you would see if you let it sit in a standard bank. Work for your money, then let your money work for you!
Modern Brokerage Account
Back in the day, brokerage firms were stodgy and cumbersome to deal with. You had to physically call a broker or use a desktop computer. Not to mention the fees that came along with it.
That’s changed. The internet is not just for cat websites or eating challenges. In today’s investment landscape, there’s a plethora of free online brokers with slick interfaces that work on phones, tablets, or desktops.
Names like Robin Hood, Webull, or M1 Finance come to mind. These apps have truly introduced a large group of “retail” investors to the markets.
Now armed with a modern broker app, you can start diving into the more “traditional” investments like stocks and funds – the kind of stuff you hear about on CNBC (but never paid attentioned to).
For a busy student, simple is best. And the simplest is to buy an index fund, a fund that holds ALL the stocks in a given market. This is less volatile since you are well diversified and exposed to many stocks. Over the long term, America’s stock market only goes up.
Basically, if you are not interested in individual stocks or sectors of the market, just investing in the whole market is the way to go. It’s generally a safer way to get your start in investing. But again, this won’t make you a lot of money quickly, unlike how you may be able to make a quicker profit through riskier, more volatile trades.
“Retirement accounts” once made my eyes roll. I know the last thing on your mind is 40 years from now.
But hear me out. Basically, IRA’s and Roth IRA’s are just accounts or vehicles that your investments live in. You contribute to these accounts, then decide what funds or stocks to buy from there.
With a Roth, you contribute money you’ve already paid taxes on, and when you withdraw, it’s tax free! With an IRA, you contribute pre-tax dollars, then pay taxes on it when you withdraw.
For a busy college student, there are two things to set up. First is an automatic monthly or quarterly withdrawal from your checking or savings into one of these. Second is to reinvest dividends from that fund back into the fund. Something to look forward to in the future is to look for employers who match employee 401K contributions. That’s something you’ll definitely want to take advantage of — it’s basically free money.
That way, time and compound interest helps grow your account, hassle-free. Even contributions of a couple hundred dollars a month, over 30 years, end up massive!
When I started “adulting,” my knowledge of financial products was minimal. I freely admit I did not know the difference between a checking and savings account, much less investing.
Now with modern apps, investing is easier and more accessible. Get started with a few of the top tips above!