Most students will confirm that their financial circumstance in college isn’t necessarily abundant. You might often hear students describing themselves as “financially strained” primarily due the need to balance between school and part-time work, which won’t necessarily result in a hefty income. Consequently, investment is hardly ever a prominent thought for most students. Yet, despite potential obstacles, college is an excellent period to start investing, regardless of how much money you’re making. Here’s why:
YOU CARRY FEWER FINANCIAL BURDENS
A significant number of college students aren’t married nor have children to cater for. Some even receive financial help from their parents specifically for tuition fees. If this describes your situation, you might find yourself with extra money, even if it only comes from a part-time job. The world of investment often follows a risk-reward philosophy, meaning the higher the risk, the bigger the potential returns. Investing in riskier financial assets could yield significant financial benefits, provided you’ve done your research thoroughly. As a single individual, without significant commitments like house mortgages or child-related expenses, you have more money to invest and seize various investment opportunities.
INVESTMENT CAN ACT AS A SAFETY NET
Graduating college often goes hand in hand with a hefty student loan debt. It’s, unfortunately, quite common for a large proportion of a graduate’s income to go towards paying this debt, sometimes for even longer than a year. This explains why many young adults struggle to buy homes or save for retirement as their earnings are tied up in loan repayments. However, if you have a considerable amount already invested, loans and debt may prove less intimidating. Through intelligent investment choices, you can generate profits that can expedite your loan repayments. Moreover, in the event of unforeseen emergencies, a solid investment portfolio can provide financial stability, but it doesn’t replace a subsequent emergency fund.
SAVE BY DEFAULT
A majority of young people often postpone saving until they secure a job with a regular salary. Yet, it’s not necessary to make a hefty income to save. Savings can always result in financial benefits, regardless of the amount. And investments can further encourage savings. Begin with small investments which can guarantee growth of your money. An example could be investing in a 401K provided by your employer, who will potentially match your contribution. If this option isn’t available, there are several other low-risk alternatives to grow your money.
COULD YOUR MONEY BE SPENT BETTER?
Many students find themselves living from one paycheck to the next. Surplus money often goes towards non-essential purchases. Stashing money away in a savings account may sound unattractive while your peers are enjoying their youth. However, why not take a lead? Time is the most valuable asset when it comes to investments. The sooner you begin, the larger your investments will grow, setting you up for a financially robust future. Choose to invest your extra cash, no matter the amount. Your responsibilities and expenses are likely smaller in college compared to when you graduate, so seize this opportunity to better your finances. Embrace risks, expect high returns, learn from your mistakes, and familiarize yourself with saving culture. This will set you apart when you finally offset your student loans or purchase your first home.
Did you invest any money while still in college? If you did, how did you choose your investments?
