Investing for college students isn’t as hard as it may seem. Did you know you could start a very simple but prosperous investing plan with just a small commitment each month?
The problems most college students run into when it comes to investing is lack of capital. Not long ago, it wasn’t worth your time and effort to invest in the market. This is because commissions used to eat up investor’s returns. If you had only $50 a month to invest, would you want $10 of that going towards your broker? The key to successful investing is keep 100% of your returns as possible.
The first company to market investments towards young students has been T. Rowe Price. With a minimum of $50 a month, you can invest in one of their mutual funds. There are small account fees, but nothing that will eat away at your returns.
They offer a wide range of index funds, with below average expense ratios. College student’s number one problem is shortage of capital. However, there are no excuses now since it only takes $50 a month. The main advantage to starting early is compound interest. Many students have a vague idea what this is. However, have you realized the power that compound interest possesses?
For example, if you invested $50 a month into a Roth IRA, with an 11% return, at age 70 you will have approximately $1,370,000 by that age. All it takes is $50 a month. If you waited and started at age 30, and put in $100 a month with an 11% return, you total would be approximately $774,992.
The opportunity to take advantage of compound interest dwindles each day. Albert Einstein called compound interest, the “The most powerful force in the universe.” Don’t hesitate any longer. Take advantage of compound interest today. Having little capital is no longer an issue.
There is also another hidden benefit to this automatic investments, it forces you to invest each month. For some strange reason, most investors like to buy high and sell low, a strategy that doesn’t make sense in any other endeavor. By forcing to invest each month, think of it as buying more when stocks are on sale, and buying less when stocks are overpriced. A great but simple strategy.
Investing for college students isn’t as time consuming and complex as it once was. Start learning about simple investing strategies today. There are many advantages down the road. If you can start building a retirement portfolio for just $50 a month, imagine what you can do once you start making more money. Use the calculator below to dream big. Any goal can be reached with the right planning.