As a college student, it is vital to understand both the freedom and responsibilities that you face. These responsibilities include the art of money management. Money management doesn’t just mean understanding how to save money, but also understanding the correct and proper way to invest it. There are multiple ways to invest money. In this article, we will explore CDs, consistent investing, & S&P 500 Index Funds.
A high-yield savings account is essentially the same as trying to save money and is maybe one of the easier methods out of the 4 we are going to discuss. A high-yield savings account is a type of bank account that pays you interest based on your deposits at rates that are way above market levels for traditional savings accounts and checking accounts. The best part of this account is that you’re not limited severely in terms of withdrawals. Rather, it allows you to use the accounts as a savings and a checking account while still getting the benefits of the interest rates on these accounts.
The next method is also extremely similar to the previous one but requires a little bit more investing knowledge. In this method, you would be using the money (presuming you are participating in a paid internship program or have a part-time job) that you earn and investing a little amount either daily, weekly, or monthly. This amount can range anywhere from $10 to $30 but should be done consistently. In this case it's important to pick a timeline of investments that you are almost certain you can keep so that the amount being invested is continuous. This will lead to a buildup of investments over time meaning that instead of having to invest a large amount of money all at the same time, you will be able to reap the same benefits.
Another alternative to easy investing in college is through S&P 500 Index Funds. Many students hear the name of these funds and imagine that you need a lot of investing knowledge in order to understand how to invest in them, whereas in reality, the investment process is a lot easier because you need very little knowledge about stocks and investing to get started in S&P 500 Index funds. The reason that S&P 500 funds are recommended for college students with little to no investment knowledge is that you don’t need industry specific knowledge in order to earn the money you are investing since the funds contain stocks from multiple different industries making them less volatile. If they are less volatile, you also have less of a chance of incurring huge losses than you would when solely investing in stocks.
Overall, it is always suggested that you invest in more than one method so that if one method doesn’t work or one market, crashes it does not completely ruin your investment portfolio.
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