If you are a student who has some spare cash, investing is the right choice for you. By extra cash, we mean the money left once you have taken away all your expenses from your income. The earlier you start, the higher you tend to earn. An early start means that you have less cash available, which means that you will lose less money if you goof up. Time is on your side, and as students stay invested longer, they earn more too! As a student, your first investment should not be focused on the amount of money you invest. It has to be more about where you spend it. There are different investment avenues available, and each option has its pros and cons. The returns you reap from your investments depend on two main elements — Risk and Time. The more the risk, the higher the time returns. The longer time you stay invested, the higher the expected return. Students have a relatively higher appetite for both Risk and Time.
Following are the top 5 ways you can start investing as a student
Savings Account - These are the accounts offered by financial institutions where you can put your money. The institutions pay you interest at regular time intervals for the amount they hold. Savings accounts offer the lowest interest rates but come with a safety assurance that your money stays invested risk-free. They are the best avenue for keeping emergency funds available on-demand.
Investing in index funds - If you are aware of stock markets, you would have surely come across news about windfall gains and super crashes too. It does not make sense to invest in stocks without getting appropriate knowledge about them. However, you can invest in an index fund. Such funds mimic the movements of various stock market indexes and earn a relatively higher yet stable return for your investments. They are the best first steps towards learning about stock markets and charge low maintenance fees too.
Automated savings using Robo advisor - Modern technology has brought in several goodies to the investment world. Now you do not need to study and track every stock or mutual fund. You have Robo-advisors at your disposal. The artificial intelligence-powered robot comes up with investment advice for you. The AI engine studies investment patterns based on different characteristics like age, finances, buying power, social situation, etc. Outsource the hard work of research and let the robot do its stuff.
Join crowdfunding platforms - Investors now do not have to bring in big amounts to lend. They can join crowdfunding groups (sign up on the website) and contribute small parts to lend big loans. Different crowdfunding platforms focus on lending different industry sectors. You stand to get a well-researched portfolio to invest in, with decent returns.
Invest in Real Estate - The majority of individuals that appear in any top billionaire list are real estate investors. Your investment amount may be small, but it can still help you get into real estate. You can invest in REIT or Real Estate Investment Trusts. These corporations own and manage properties like - housing and office buildings, commercial space, etc. Students can invest in small amounts and share the profit earned by REIT. Consider this as your first step towards entering real estate that helps you multiply money and gain experience in the process.
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