College is a great time to start investing, despite the challenges of moving away from home and managing a busy schedule. Even with limited funds, students can begin building a portfolio with as little as $20-$30, thanks to various free or low-cost options. Starting early allows students to learn valuable investing lessons and develop a long-term investment mindset without risking large sums of money. Here are several ways for college students to begin investing, ranging from very safe to more adventurous approaches.
1. Consider starting with a high-yield savings account or CDs
– High-yield savings accounts offer much higher interest rates than traditional accounts, allowing for easy withdrawals.
– CDs provide fixed interest rates for money committed for a set period, ideal for super-safe investments like next year’s tuition.
2. Turn to a free or low-cost broker
– Brokers like Fidelity and Charles Schwab offer free stock and ETF trades, along with research and educational tools.
– Robinhood offers completely free trading, including options and crypto, and has a low-cost research option through Robinhood Gold.
– Webull provides commission-free trading with more customer support options than Robinhood.
3. Invest a little each month
– Using commission-free brokers, students can invest small amounts like $20-$30 monthly without fees eating into their capital.
– Regular investing encourages market monitoring, research, and developing an investor mindset.
4. Buy an S&P 500 index fund
– S&P 500 index funds are diversified, less volatile, and include shares from hundreds of large American companies.
– Recommended by Warren Buffett, these funds are excellent long-term investments, providing market returns with minimal knowledge required to start.
Starting to invest in college, even with limited funds, can provide valuable financial education and build a strong foundation for future wealth. By utilizing accessible options like high-yield savings accounts, commission-free brokers, and index funds, students can begin their investment journey with minimal risk and cost.
High-yield savings accounts and CDs offer safe and straightforward ways to grow savings, while commission-free brokers make investing in stocks and ETFs affordable. Regular investments, even in small amounts, along with diversified options like S&P 500 index funds, allow students to steadily build their financial portfolios and gain essential market experience.
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