Investing money can be somewhat of a mystery without the right tools and information needed to make educated choices and take advantage of intelligent opportunities, resulting in successful investments. But while investing may seem difficult at first, understanding simple rules and tips can help provoke educated investments, even while finishing up college classes or merely beginning one’s higher education career. Getting ahead financially before even embarking into the real world of work, mortgages and student loans can be a great way to jump start one’s finances.
One of the trickiest aspects of investing while in college can be understanding the different investment options available to those interested in growing money while attending classes. While different factors may make different investment opportunities better than others for specific situations and investors, understanding what types of alternatives are available can be a vital first step to growing finances in an intelligent manner. Some of the different opportunities include:
- Savings Accounts
- Business investments
- Real Estate
- Foreign Exchange investment
Savings accounts are one of the easiest ways that college students can earn interest on their money with very little effort, while attending classes and working on a degree. Many savings accounts offer a small interest rate on the money a student saves. But while investing in this manner is low risk and simple for students with busy schedules, the interest earned may be far less than student loan interest or credit card interest accrued. Paying down such expenses before investing in a savings account may save more money in the long run. While this type of investment is low risk, it also results in small profits because of the minimal interest earned.
Stocks & Bonds
A stock is share or certificate of ownership in a company or business. On the other hand, a bond is a loan attained by a company or government, in which they promise to pay back the borrowed amount plus interest, which is how the investor’s money is grown.
With enhanced technology and growing financial opportunities, student investors can now trade stocks and invest in bonds from the cozy atmosphere of a dorm room or apartment, with a mere laptop and internet connection. In addition, many web-based investment companies offer 24 hour access to trading and accounts, seven days a week, making them a great opportunity for students with busy and sporadic schedules.
Those willing to make greater risks can invest in mutual funds, which offer higher yields of return and are comprised of stocks, bonds and other investments. How successful a corporation is can directly affect the money earned on stocks, bonds and mutual funds, depending on their own success and short comings.
There is more than one way to invest in real estate. You can purchase a house as an investment and rent it out to people. Although the market is not what it used to be, it is still possible to flip a house in some cases. In this market, just buying a house and expecting it to appreciate over the years is not usually a good idea, but it could be done depending on the local real estate market.
Commodities are often natural resources such as precious metals like gold and silver or crops such as coffee, sugar, and wheat. You can invest in these commodities through the futures market, exchange traded funds, stock, mutual funds, and futures contracts. All of this must arranged through a licensed brokerage firm.
Business investments can be made through starting your own business, investing in another persons business as a partner, or loaning startup capital. There is no set way to this, as it depends on what kind of agreement you make with the parties involved.
Foreign Exchange Investments
This is investing in foreign currencies like the the Euro, the Yen, or the Peso. This can be quite lucrative if you know what you are doing. You will need to do this through some banking institutions or through Forex.
How to Pick an Investment Opportunity
While there are a multitude of investment opportunities that can help busy, odd-scheduled students earn money and grow their portfolio, there can be a variety of options that can be better suited depending on the specific, pin pointed needs and diverse situations. The amount of money being invested offers an array of opportunities dependent on the beginning rates and necessary fronts that an investment company may require. For example, a web based stock trading company may require a small amount of money fronted to begin investing while mutual funds investment may require a larger sum for initial investment.
Risks & Initial Investments
Another important consideration for potential student investors is the amount of risk one is willing to take. Money that may be needed for emergencies or is necessary for other obligations after a certain period of time may make different investments better suited than others. If money is needed sooner than later, a lower risk investment, like a savings account is better suited. On the other hand, student who are willing to make larger risks with larger amounts of money may be willing and interested in learning more about investments like mutual funds, real estate or foreign exchange. Understanding the wide array of opportunities and the risks and initial investments involved can help students with other expenses like credit cards and student loans make intelligent investments and grow their money and financial portfolios.
This article was written by Brian Taylor, a blogger and writer at sites such as privatestudentloan.org.