When you’re in college, it can seem impossible to gather enough money week to week to stay afloat, let alone put anything into savings or investments.
Those who have spare money often put it into fun things, like trips, snacks, alcohol, and clothes. But is there a better way to spend your small amount of free cash?
Many college students are intimidated by the stock market. Trading stocks seems like it’s for “real adults”, not those who are in their late teens to mid-twenties. But is that actually true?
We’re here to make the case for why you should enter the stock market as a college student, or even a college-aged person. Let’s talk about it.
Start As Early As Possible
When you start trading stocks as a young person, you’re getting ahead of the game. Throwing your spare money into the stock market can be the difference between having a healthy amount of savings in the future and constantly living hand to mouth.
When you’re investing in the stock market, you’re expecting the money to grow. You can definitely just start day trading stocks if that appeals to you, but it’s a great idea to invest a few dollars in stocks primed for long-term growth and development, even if you also feel like making a few risky purchases.
Over time, you’re looking at exponential growth. Even if you only get a 5% return every year, that doesn’t matter if you’re starting when you’re still in your late teens to mid-twenties.
The money will grow and you’re in this for the long haul. Spending a few dollars per month on stocks, even fractional stocks will turn into more money later. Investing is really the best way to turn your extra change into actual usable and substantial funds.
Start Small
You don’t have to start by putting thousands of dollars into the stock market. You’ve likely seen people on Reddit or social media with their giant risky portfolios turning $10,000 into $100,000 overnight, but that’s a very risky game to play, especially for those who don’t have that kind of money to spend.
All you need is your spare change.
When you’re budgeting every month (and you should be budgeting), pay attention to the money that you have leftover. Some of it can be used for non-necessities and some should likely be put away for emergencies, but even using a spare 5 dollars per week can add up (though ideally, you have more).
Some stocks haven’t fully recovered yet from the rough beginning to 2020, meaning that if you’re wise, you can get more bang for your buck.
You also don’t have to invest in complete stocks.
Fractional shares are a great way to keep your portfolio diverse while only spending a few dollars per transaction. You may not be able to afford an entire Apple stock, but you can likely afford a 5 dollar fraction that will slowly grow over time.
Use Apps
Investing now is easier than ever. You don’t need to be a professional to fire up one of the popular trading apps and navigate the stocks that you’re considering.
Many apps are geared specifically to younger people. Some of them have special offers for sign-ups, and some make saving easier than ever by simply collecting your spare change and throwing it into a diversified portfolio for you.
Basically, no matter if you’re a seasoned professional or a newbie who doesn’t have the time to think about the stock market but still wants to get involved, there’s an app that can make your trading experience easy.
Learn Young
The older we get, the less able we are to take in new information. While you’re already an adult, you’re still more elastic now than you will be in the future.
Learn about the stock market at a time when you’re better able to commit time to that learning experience.
When you’re in college, you have a special advantage. Many schools offer classes that can help you with the stock market, whether they’re stock-specific, finance and business classes, or even just basic statistics. Some colleges even have investment clubs where you can learn and trade amongst people who are doing the same thing that you are.
If you’re able to spare the room for an extra class, consider adding one that will help with your financial journey. If there isn’t one available, consider learning online. There are plenty of helpful courses, including this advanced options trading course that gets into some of the more complicated aspects of the stock market.
Prepare For Your Future
You’re young and flexible now, but in the future, you might be grateful for the nest egg that you’ve built with your stocks.
It’s easy to think in the short term. Why bother investing this money if I could use it now? It won’t help me for a long time, right?
Well, yes, but what will give you the most satisfaction? You could spend those five dollars at the end of the week (after all necessities are accounted for, of course) on a milkshake, a thrifty top, or a ticket to a show. There’s nothing wrong with that.
Or, you could invest it and turn five dollars into more money. This is basically passive income if you play your cards right.
This isn’t to say that you can’t lose money in the stock market. You should still be attentive, but long term growth gives you a lot of wiggle room if you commit to leaving your money where it is.
It’s great to spend money on wants and extras, and you should be doing that in your youth as well. Just try to set aside a bit of money for the future you. Consider it a savings account.
Start Trading Stocks Now
If you’re not invested in the stock market yet, do your research and see if trading stocks is an option for you. You don’t have to dive in headfirst, you can wade in and see how you feel.
Set yourself up for a more financially secure future. You don’t have to wait until you’re older and financially stable to start trading. Starting in your 20s is a great move.
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