Looking for ways to start investing for free during college? Read our beginner’s guide for those ready to create their first investment portfolios.
Investing, no matter how much or little, uses your assets to purchase stocks, bonds or exchange-traded funds to make the most out of your money. By not investing, your money will just lay idle in your account, instead of earning you potential returns.
1. Evaluate Options Of Investment Tools
First, let’s evaluate your options of investment instruments.
When getting started, you should decide whether to invest in stocks, bonds or ETFs. Stocks are shares of ownership in a company, which fluctuate in price as the market changes. These are sold publicly by companies to help them increase their net worth, or to pay off company debt.
The next option is bonds, which are loans to a company or government entity. These are less risky than stocks, as you are promised by the entity that you will be paid back, plus interest. You can even predict how much you’ll earn with a bond before paying it.
ETFs, or exchange-traded funds, are a combination of the first two. They cluster together stocks, bonds or securities that you can buy through a broker.
2. Get An Investment Account
To Invest in stocks, you should start with having an investment account. This could be either through an online brokerage account or a robo-advisor account.
A brokerage account is ideal if you would like to be more hands on with your investment account. They let users open an individual retirement account, or a taxable brokerage account.
Robo-advisor services let customers play a more passive role in their investing. This gives you less work, but also less say in your own investments. Investment goals are up kept by the robo-advisor, and the management fees are a fraction of that of a human financial advisor with a brick-and-mortar bank.
As a beginner, and a college student, we recommend starting with online banking. This is a great way to save money on fees, and to have technology do most of the heavy lifting for you.
MoneyLion, for example, allows users to transfer money away from their bank account automatically every month to be invested. This is done without any management fees, ATM fees or monthly fees, so you can keep all your earnings from each investment. Every month, your diversified portfolio will be added to by a determined monthly amount, across various domestic and international stocks and bonds. This can be as much or as little as you’d like, so you can invest no matter what your income looks like.
If brokerage accounts appeal to you, and you want a sense of hands on investing, then companies such as Ally Invest (NYSE: ALLY) or Merrill Edge are great for beginners.
3. Start Investing
Once you have determined the amount of money you would like to invest, and what investment tools to utilize, you can finally start investing through a brokerage account of robo-advisor service! These are the fundamental first steps of investing, and we hope this gives you a basic layout of what investing looks like.
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