College students are known for getting things done while on a budget, so any extra money that comes their way is either going to be saved or used for enjoyment. Investing your money may be one of the last things you think about when you’re trying to get by on what you have and save as much as you can. There is no problem with using your money how you want, as a matter of fact, that is your freedom. But, you don’t need hundreds of dollars to start investing, and you certainly don’t need a degree in finance or business to do it. Investing isn’t a complex thing that only professionals or people with a lot of money do — investing is something everyone can do, even broke college students. 

You can start investing now, and it’s not as hard as you may think it is. But, how do you start? Today, we will be talking about how you can start investing and why you should start investing. Don’t stress yourself out too much, we’ll break it down for you. As always, Upper Crust Food Service is here to provide the best, most fresh, and high-quality college catering services to sororities and fraternities across the nation. To learn more, visit our site and contact us today.


Why Should You Start Investing?

Before we dive into how to invest, let’s first talk about why you should start investing. You may be thinking that the money you have saved in your shoebox is doing just fine, and you don’t need to invest because you save. Well, inflation is a thing that will make your shoebox money decrease in value, much more than you may think. The average annual inflation rate is around 3%, which means, each year, prices increase by around 3%. While this may seem like a minor increase to you, 3% adds up over time, and your cash will lose value very quickly, even if you get to accumulate that money. 

Even money that is sitting in a savings account isn’t safe, as it will rarely give you enough money to live on when you retire. No matter how much you save, inflation will continue to make that money less and less valuable. Investing is crucial if you want to build your wealth for your future self — so you can retire and live comfortably. 

Stocks, Bonds, and Everything Else You Hear But Don’t Understand

When you start dipping your toes into the world of investing, there some vocabulary that is good to be somewhat familiar with. When people talk about investing, they are referring to investing in stocks, bonds, or collections of both. Let’s take a closer look. 

A stock is a piece of ownership in a company that you can buy or sell. You are most likely the most familiar with this form of investment. When investing in stocks, you hope that the shares you purchase will go up in value, allowing you to ultimately sell them for a profit. Or, you can keep them and watch their value grow for years and years to come. 

Bonds, on the other hand, are a special type of loan that governments use to raise money for projects. They can provide a steady stream of income by paying interest over a set period of time. When you buy a bond, you are essentially loaning money to a government or corporation with the expectation that they will pay you back the original amount plus interest. Bonds are less risky than stocks, but your potential profit is also a bit lower.

ETFs, or exchange-traded funds allow you to invest in large collections of stocks and bonds without having to buy them individually. ETFs are an affordable option because you don’t need a lot of money to purchase them. They are also hands-off, meaning that you don’t have to do a ton of research to choose the stocks or bonds or take the time to buy them individually. Lastly, ETFs are easy to automate. Most brokerage accounts let you set up automatic contributions from your bank account. This way, you can make consistent contributions without having to think about it. 

Lastly, you have the option of investing in mutual funds, which are a mix of investments packaged together. Mutual funds allow investors to skip the work of picking individual stocks and bonds, and instead purchase a diverse collection in one transaction. The inherent diversification of mutual funds make them generally less risky than individual stocks. 


Pick an Investment Strategy

Here’s where you may need to start doing some critical thinking. Your investment strategy depends on your savings goals, how much money you need to reach them, and your time horizon. If your savings goal is more than 20 years away (like you are saving for retirement), almost all of your money can be in stocks. Because picking stocks can be time-consuming and complicated, you can invest in stocks through low-cost mutual funds, index funds, or ETFs. 

If you’re saving for a short-term goal (you need money within five years, for example) then you may be better off keeping your money in an online savings account, cash management account, or low-risk investment portfolio. 


Choose an Investing Account

Generally speaking, when investing in stocks, you need an investment account. For the hands-on types, this usually means a brokerage account. For those who would like a little more help, opening an account through a Robo-advisor is a sensible option. An online brokerage account, however, offers you the quickest and least expensive path to buying stocks, funds, and a variety of investments. With a broker, you can open an individual retirement account or an IRA, or you can open a taxable brokerage account. 


A Robo-advisor account on the other hand offers the benefits of stock investing but doesn’t require the owner to do the legwork required to pick individual investment. Robo-advisor services provide cimp[lete investment management. These companies will ask you about your investing goals during the onboarding process and then build you a portfolio designing to achieve those aims. The management fees are generally a fraction of the cost of what a human investment manager would charge, about .25% of your account balance. 


Set a Budget

How much money, realistically, do you have to invest? You may think you need a large sum of money to start a portfolio, but you can begin investing with as little as $100. The amount of money you are starting with isn’t the most important thing — it is making sure you’re financially ready to invest and that you’re investing money frequently over time. Before investing, be sure that you have an emergency fund set aside, so in emergencies, you don’t have to sell your investments — losing all of the money you have made and all of the potential money you could make — in a time of need. 


What Should You Invest In?

This is what everyone wants to know, but the answer isn’t always easy. It really depends on you, your risk tolerance, how much money you are able to invest in, and how hands-on you are. To be honest, it may take a fair bit of time and energy in research. 


Remember that Investing is a Long-Term Venture

Once you have invested money, no matter how or where don’t touch your investments. Investing is not a “get rich quick strategy,” and you won’t become a millionaire overnight. Investing is long-term, meaning that you really shouldn’t pay too much attention to what happens to the market in the course of a week, month, or even year. Whether your returns are high or low now doesn’t matter. You only really will care about the average returns over the course of a few decades. 

This blog seems long, but it just scratched the surface in investing. You can learn more if you want, or take what you learned here and apply it to your life. The good news is that there are plenty of resources and beginner-friendly tools that you can use to start your journey. If there is one thing to remember, it’s that investing isn’t as convoluted as you’ve been told it is. Investing can be easy, and everyone can do it. 


If you are looking for a college catering service in your area that provides fresh, high-quality food to your sorority and fraternity, then check out Upper Crust Food Service. Our chefs create fun and delicious menus that get students excited to eat. Learn more by visiting our site.