Blog Students Advice For Students The University Students’ Guide to Investing in Stock Market

The University Students’ Guide to Investing in Stock Market

Saving money and investing it are two terms that do not really come to mind when we are in university. These activities are something that most uni students leave for at least until after graduation. But did you know that your years in the university are the best time to start investing your money?

It is true that you may not have a lot of money right now. But consider this – you may have taken a part time job over your summer holidays or maybe even an internship. The money that you earn there can be blown off on beers and pizzas. But what if you save a small amount of your hard earned money and watch it grow over the years until it becomes a fund big enough to buy yourself a car or maybe even a house in the near future?

Why is University the Best Time to Start Savings and Investments?

The mantra for investments in the market is always to start young. That way you have time on your side. And money only multiplies with time. Starting off your investments at a young age gives you an edge over older investors as you will have to put in a smaller sum of money to ultimately reach the same goal.

For example, if you start investing at the age of 18 with a goal to reach a million dollars by the time you reach 50, you will have to invest a much smaller sum than say a person who starts investing at the age of 30 to reach the same goal.

Investments in the stock market will also be beneficial for you as you will have a handy little fund which you can use on a rainy day. You will also be more experienced in the investment area which will only help you manage your investments later on in life when you will have to manage much larger amounts of investments.

Taking the First Step towards Investment

Once you have decided to invest your money in the stock market, the first question that comes to mind is how and where to invest it?

  • Keep the goal in mind

Investments are typically made with two goals in mind, to either preserve the capital or to generate interest on it. Preservation of capital is preferred by those who may need their investments back at any point of time such as big scale businessmen.

On the other hand, university students should lean towards investments in the stock markets which can generate a good return on their investment on a long term basis.

  • Amount of money

The first step is, of course, to decide how much amount you are willing to invest. You must keep in mind that investments in the stock market also have a risk factor and therefore you must be prepared to incur losses on your investments.

However, high risk stocks also give high returns. If you do not want to take risks, you can still invest in relatively safer stocks whose values are not much affected by fluctuations in the stock market.

  • Build your portfolio

After that, all you have to do is build your portfolio with any brokerage firm and start investing. You can choose a conventional broker who operates out of his office or you can go for the new generation online brokerage firms.

The best thing about online firms is that they generally do not require any minimum investment. You can start investing in the stocks with as little as $10.

How to Decide Which Stocks You Want to Put Your Money in?

Stocks are essentially an ownership stake in a company which the company advertises to generate capital for itself. A careful reading of the financial news and understanding the stock market will give you a good idea about which stocks are good for investing.

If you can take the time out from your studies, you can do a technical analysis of the stock prices of the past few years or you can even do a fundamental analysis to understand a company’s history and current situation better and predict where its stock will go in the future. You can also talk with your economics tutor to understand stocks better.

If you do not have the time for stock market analysis or simply are not inclined towards management of your stocks yourself, you can always go for managed investments.

In a managed investment scenario, you appoint a manager who will handle your investments for you and assign the right stocks for your portfolio as per your risk appetite. You may have to pay a small fee for this service but at least your stocks will be in good hands.

Some More Tips for Investing

Although investing in the stock market is a great habit, the students who have high amounts of student loans should be a bit careful about taking risks in the market. You should always risk only that much money losing which will not have too much of an effect on your financial condition.

It is also advisable to have a diverse portfolio such that some amount is invested in high risk stocks while the remaining is invested in low to medium risk stocks. This way, even if the market is down for an extended period, you will not incur a huge loss. On the other hand, you will always have the chance of getting a windfall gain through your high risk stocks.

You should also keep a continuous track of your stock movement through the monitoring tools that brokerage firms provide access to. Even if you have managed investments, it is still a good practice to have an understanding of the portfolio created for you, so that you can be sure that your money is being put in the stocks which suit your profile.

Conclusion

Investing in the stock market sounds like a scary thing in the beginning. But once you overcome your fear of the stock market you will realize how profitable it can be. The most difficult part is inculcating the habit of saving and taking the first step towards investment.

However, you should never think that your savings are too small for investment. If your pocket-money is lying idle, just invest it in the stock market without a second thought.

Rum Tan

Rum Tan

Rum Tan is the founder of SmileTutor and he believes that every child deserves a smile. Motivated by this belief and passion, he works hard day & night with his team to maintain the most trustworthy source of home tutors in Singapore. In his free time, he writes articles hoping to educate, enlighten, and empower parents, students, and tutors.

You may try out his free home tutoring services via smiletutor.sg or by calling 6266 4475 directly today.