Investments can take many forms. When most people think about investing, they think about investing in the stock market or in real estate. Investing is much more than that! We make investments every day without even realizing it. A major investment that many make, is that of going to college. A lot of people do not view attending college as an investment, but it is. When you attend college, you are hoping that your degree will aid you in obtaining a higher income in the future. At least, that is the general reason why people attend college. College costs a tremendous amount of money these days, and it is a rather risky investment that many are willing to take.
The financial risk alone is off putting, and it can bury people under a mound of debt. Student debt is on the rise and it does not seem to be slowing down. Simply put, college is an expensive and risky investment. It tends to tie up the funds of many of its attendees, and tends to hurt them financially. Even though all of this is true, you should not put off investing your hard earned dollars outside of obtaining your degree. You need to diversify. Like I said, college is an investment, and you can consider your degree a part of your investment portfolio. You do not want to only rely on one investment do you? Now, it will be difficult to invest while in college, so here are 4 investment ideas that you can afford on a college budget.
You do not need much money to start investing in the stock market. You can even start with just $100; however, I recommend you have at least $1000 to start. You will not be able to live off of this small investment despite what some stock market “gurus” promise. You can however, begin to make some income quickly. You can do this via swing trading or buying and holding (i.e going long). You will be unable to effectively day trade with such a small amount of capital.
I recommend that you simply buy and hold in the beginning phases of your stock market investing journey. This allows you to get your toes wet, and it is safer than most strategies. When you buy and hold, you do not need to focus on the short term market swings. Instead, you will be focusing on the long term. The way you will make money with this strategy is via dividends and appreciation. If your shares gain value, you can sell them to obtain a profit. If they do not move much or move downward, you can hold them for dividends. Only invest money that you are comfortable losing in case the stocks you choose move against you. If you want to learn more about stock market investing, sign up for my email list to obtain a free eBook!
This has the lowest barrier to entry out of every recommendation in this post. Micro-investing is a form of stock market investing. You partake in it by using a micro-investing app such as Acorns or Stash. These platforms use a system known as round-ups to automate the investing process. Round-ups are best explained with an example.
Let’s say you buy a cup of coffee for $1.75. The total transaction will be rounded to $2.00, and the added $.25 of the transaction will be invested in the stock market.
Pretty cool right? Most micro-investing platforms are mutual funds. This means that your investments are managed by a professional manager or a computer. The only thing you need to do when you use a micro-investing app is swipe your card. If you want to read more about micro-investing, check out my other article here.
Real Estate Crowdfunding
This is a rather new form of investing that was made popular by companies like Fundrise. Basically, investors are able to obtain properties via crowdfunding. This was only recently made legal in 2012, so the concept is very new. The returns can be lucrative though, and it requires a small amount to start.
For example, Fundrise’s minimum investment is only $500. The problem with this type of investing is that it has never faced a recession. Meaning, the stability of crowdfunded real estate during a recession is unknown. If you go this route, make sure you only invest what you can afford to lose.
Start Your Own Business
This investment is by far my favorite. I started a couple businesses while in college, and I was able to produce a modest income with them. A well-designed business can provide you with substantial returns. The amount you make will typically correlate with your capital and time investments. You can start a business for as little as $100, but it will require a large amount of time investment to grow.
Some businesses will require more time and capital than others, and you need to be conscious of this.The problem with starting a business is that is a very risky. Most businesses fail, and you need to be committed to yours if you start one.
So what do you think? Are you going to try any of the recommended investments? Like I said, I personally prefer number 4. I also invest quite a bit in the stock market via index funds and dividend growth stocks. Remember, diversification is the key to success in the investing world! Comment your thoughts! Cheers!