Edward Stern is a guest blogger for My Dog Ate My Blog and a writer on online degrees for Guide to Online Schools.
As a college student or recent grad, investing your money may be one of the last things on your mind. Retirement is so far away (shoot, you’ve barely started working) and if you’re living off leftover pizza in dingy off-campus housing, saving money is not always feasible. Still, if you’re able to save a little cash or if that savings bond your grandparents bought you when you were born matures, it’s not a bad idea to start investing.
Investing at a young age has immense benefits, ones you will not see immediately but you will enjoy when you’re (gasp!) your parents’ age. Forgoing a new stereo or video game system now and investing that money for later will have much greater long-term benefits than being able to play Call of Duty until the wee hours (plus the dudes next door have an XBox, right?). Even with just the couple hundred bucks or so you save you can make solid investments in the stock market.
The idea with investing at a young age with limited funds is to make solid picks that will be around in 20, 30, even 50 years, and that will continue to grow (albeit, in most scenarios, slowly) and make for a fruitful investment. High-risk stocks may appeal — I mean, as a young investor, what do you have to lose? — but the chances of catching lightning in a bottle and buying the next Microsoft early is going to happen in only the rarest of circumstances.
A better use of your money, which there probably is not a lot of, is to go with something more established. These may be pricier, but will have an exponentially better chance of keeping their value and gaining more. Think of universal staples you and people the world over use and frequent daily: McDonald’s, Coca-Cola, Costco, Google if you can afford it. Right now, you’re building the base of your portfolio, and these stocks will help provide a rock-solid foundation.
If you have the money to take a risk, take a calculated one, and one that doesn’t take up too much of your investing capital. Take what you’ve learned in school or one of your passions and find a company doing great things in that interest. Studied world hunger? Why not invest in a fertilizing company on the rise? As the world’s need for food production goes up, so will its usage of fertilizer.
Above all, don’t buy blindly or do what the pundits say. Do some research. This is your money, and you need to make it count now to have it count in the future. Follow stocks. Educate yourself on financial lingo, maybe even buy and read a Wall Street Journal. A smart investor is an educated investor, and something any educated investor will tell you is to enter the market early and make wise choices by investing in mainstay companies that aren’t going anywhere anytime soon.
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