3 Reasons to Start Investing While You’re Still in School

Webull 09/16/2022

As a college student, you're likely focused on studying and enjoying time with your friends before you need to enter the workforce. You probably aren't thinking about putting any of the money you have into stocks, as it might not seem like the best idea at your age. But, if you have the means to do so, starting your investment journey as a student can be a great way to set yourself up for financial success.

Get a Head Start on Your Financial Future

The earlier you choose to invest your money, the more time and potential it has to experience growth and earn you a profit. If you are in a situation where it's possible for you to invest, it's a good idea to consider it. As a young person with your whole life ahead of you, investing now will put you ahead of your peers who may not choose to begin investing for many years to come. You will already be in a position where you can contribute to your retirement fund, save for your future family, and set aside money for things like a down payment on a house. By thinking of your future, you can prepare for milestones that might otherwise take three or four times as long to reach.

Your Risk Tolerance is High

It's unlikely that you'll have a higher tolerance for risk at any other point in your life. If you have any sort of income as a college student with few places to spend it, you don't have much to lose when it comes to your investments. This is not to say that you have nothing to lose or that there's no risk at all, but if you don't have a family to provide for or bills to pay, there's more room for you to make smart investments with more risk tolerance than you may have ten or so years down the line. You have more time to recover from loss, and taking a hit when you have less responsibility is much easier to recover from. A loss you experience now will not be as debilitating as the same loss could be when you are deeper into your career. Although, you should always be careful when it comes to investing your money, no matter your age or ability to handle risk. The last thing you want is to put yourself in a tough spot that might be difficult to escape.

Gain Financial Literacy

In school, you aren't typically taught how to do things like budget, consider financial implications, or make long-term plans for your money. When you start investing, you're forced to keep these things in mind as you track your investments, make carefully thought-out decisions about how and what you choose to invest, and set goals for yourself as an investor. This can allow you to save more and become conscientious about your spending habits. Financial literacy is a crucial part of adult life, and even more so for those with investments. Understanding this early on can serve you well in the future, as you will find it easier to make smart decisions about your assets. In the long run, you will have more potential for higher profits and a larger income when you have a solid grasp on what it means to be financially literate while you're still in college.

The bottom line: investing as a college student can be a great idea for those who are able to do so. Putting money into stocks may not sound like it should be a top priority, but your future self might thank you for planning ahead. Be sure that when you do choose to invest, you choose a path that suits your budget and needs.

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Disclosure: All investments involve risk, and not all risks are suitable for every investor. The value of securities may fluctuate and as a result, clients may lose more than their original investment. The past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss in a down market. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing.