Usually money is the last thing on your mind as a college student. You’re focused on having a social life, studying for classes, doing homework, working a job, or heck just relaxing. There are some college students that like to get financially ahead – something we suggest at Teen Finance Tips.
The best thing you can do as a college student is to learn more about investing with these tips.
Tips for College Students Wanting to Invest
- You should read as much as you can.
- You should not have any high-interest debt.
- You should research and choose a brokerage firm to utilize for investing.
- You should keep your investments diversified.
- You need to start investing as soon as possible.
If you’re a good reader, we hope you are being in college, then you should have no problem staying on top of what’s happening in the industry and learning how to invest, better. You can still invest even with a little amount of money, so don’t worry too much about start up funds. Obviously the more money you have at the start the more aggressive decisions you can make.
The Best Investments to Make as a College Student
Here are our top five ways you can take advantage of the money you have as a student to make even more, while you’re in college:
1 – Money Market Account
A money market account is highly similar to your standard savings account but they are not FDIC insured. This makes them a gamble if something were to happen to the company or industry. They usually give you a higher interest rate for this gamble and have a slightly higher minimum starting balance. These can be a good way to deposit cash while you’re in school for the half a year if you want that extra boost.
2 – Certificate of Deposit
A Certificate of Deposit (CD) is a pretty safe bet as a short term investment, most stay below 5 years which is about the average time someone is in school. A CD is a bank owned product that requires you to keep your money in the account for a listed amount of time, usually 90 days all the way up to 5 years. While you’re letting the bank use your money they’ll return the favor and pay you a higher interest rate than your standard savings account. These are FDIC insured so your money is safe while it’s locked up.
Be careful though, you can sometimes get penalized if you take the money out early.
3 – Short Term Bonds
This is really the first “investment” that you’ll run into. These bonds mature over the course of a year so they are much more predictable with interest rates and stock market events. This does not mean they are fully safe, they can still depreciate over the course of the year in terms of interest rate. You don’t “lose” your money but you can lose the ability to make more money. To do something like this you’ll have to visit a brokerage.
4 – Peer to Peer Lending
Typically to invest in peer to peer loans you need to have quite a bit of startup cash and these really are not “short term”. Your money is tied in for at least 1 year and sometimes even longer. It’s typically shorter than if you were to buy into the stock market but still the longest for this list. You get a much higher return on investment but you also risk losing your money if the buyer doesn’t pay the loan back. This is what is considered a “high risk, high reward” type of investment.
The best aspect of this is that you get paid monthly as the loan is paid – so it makes for an ok “alternative” to savings. The main goal here is to literally keep investing. As you get paid back your amount, with interest, you’ll have more after just a few months you can throw back into another loan and make even more money.
5 – Treasury Inflation Protected Securities
A Treasury Inflation Protected Security (TIPS) is a government bond that adjusts for inflation which makes it great for short or long term investments. When these mature and you handle the pay out, the amount being paid to you will increase to the rate of inflation for the current period in time. These usually range from 1 to 5 years in maturity for most people.