The best thing to invest in as a student. Why is it important to invest while still a student? The most important thing for students who are looking to invest is to know where and places to invest and how to get started. The sooner you begin learning about the market, the sooner you can begin planning your financial future as a student. Students can begin with modest amounts of money and hopefully grow both their knowledge and their portfolio.
Keep in mind that a measured approach makes sense when you’re just starting out. Going “all-in” on a stock or particular asset class is particularly risky and could expose you to considerable losses in the event of a decline. Volatility comes along with most investments and learning how to deal with the emotions it creates is an important part of the learning process of investment for students.
The Best Thing to Invest In As a Student
Here are the ideal places and where you can invest your money as a student in colleges and universities:
1. Open High-yield Savings Account
The best thing to invest in as a student is to give your savings a boost by opening a high-yield savings account. These accounts pay interest on your deposits at rates far above what is available through traditional savings or checking accounts, while still offering you the ability to make withdrawals at any time. And thanks to an overall rise in interest rates, the rates available on these types of accounts are the highest they’ve been in years. Some of the best online high-yield savings accounts you can open as a student are:
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CIT Bank
CIT Bank is known for offering competitive APYs on some products. It’s also known for having most of the bank accounts a person would ever need. It has two savings accounts, a money market account, a checking account and CDs. CIT Bank’s Savings Connect account can be opened with $100. The bank offers a competitive APY and doesn’t charge a monthly service fee for this account.
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UFB Direct
UFB Direct is known for its high-yield savings account and money market account. Both the UFB Best Savings account and UFB Best Money Market account have very competitive yields.
One of the differences is that the UFB Best Savings account, which has ATM access, doesn’t have a monthly service fee. The UFB Best Money Market account has a $10 monthly maintenance fee if you don’t keep at least $5,000 in the account.
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Bask Bank
Bask Bank is known for its high-yielding Bask Interest Savings account. It’s also known for a unique account, the Bask Mileage Savings account, where you can earn American Airlines miles.
Bask Bank, a division of Texas Capital Bank, made its debut in early 2020 with its Mileage Savings Account. In February 2022, Bask introduced its Interest Savings Account, which offers a very competitive yield and doesn’t require a minimum opening deposit.
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Popular Direct
Popular Direct is known for offering competitive yields. But those competitive yields have $5,000 minimum opening deposit requirements with the Popular Direct High-Rise Savings account. (The minimum opening requirement is twice that for its CDs.) The account also has a $25 fee for closing it within your first 180 days, so definitely make sure you’re going to keep this account for at least that amount of time.
Popular Direct has been around since 2016. It offers a savings account and eight terms of CDs. The CDs have terms ranging from three months to five years.
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Bread Savings
Bread Savings is an online bank that offers a high-yield savings account and five terms of CDs. Bread Savings requires at least $100 to open this account.
MySavingsDirect
MySavingsDirect has been known to offer a competitive yield on some of its products. It is a division of Emigrant Bank. MySavingsDirect offers a savings account and longer-term CDs with terms ranging from five years to 10 years. Currently, its MySavings Account has a very competitive yield.
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Citizens Access
Citizens Access is known for being the online bank division of Citizens Bank. Citizens Access offers a high-yield online savings account and CDs with terms between six months and five years. The online savings account doesn’t have a maintenance fee, and you only need 1 cent to open an account. Currently, all balances receive the bank’s competitive APY.
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LendingClub
LendingClub was known for its lending products. But with its acquisition of Radius Bank, which closed in early 2021, LendingClub is also known for its deposit products. LendingClub Bank was offering a top-tier yield during Bankrate’s review of the bank.
LendingClub Bank’s High-Yield Savings account doesn’t have a monthly service fee and comes with an ATM card. You can open the account with $100.
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Salem Five Direct
Salem Five Direct is known for being the online division of Salem Five, a bank founded in 1855 in Salem, Massachusetts. The division was the first online bank, started in 1995. It’s also known for offering a high-yield savings account, checking account and CDs. Its eOne Savings account only requires a $10 opening deposit, and it doesn’t have a monthly service fee or minimum balance requirements.
2. Student Can Invest in Bonds
Another best thing to invest in as a student is bonds, it can play a vital role in any investment portfolio. Bonds yield income, are often considered less risky than stocks and can help diversify your portfolio.
Bonds also known as fixed income instruments – are used by governments or companies to raise money by borrowing from investors. Bonds are typically issued to raise funds for specific projects. In return, the bond issuer promises to pay back the investment, with interest, over a certain period of time.
Certain types of bonds corporate and government bonds are rated by credit agencies to help determine the quality of those bonds.
These ratings are used to help assess the likelihood that investors will be repaid. Typically, bond ratings are grouped into two major categories: investment grade (higher rated) and high yield (lower rated). Bonds offer a host of advantages:
- Capital preservation: Capital preservation means protecting the absolute value of your investment via assets that promise return of principal. Because bonds typically carry less risk than stocks, these assets can be a good choice for investors with less time to recoup losses.
- Income generation: Bonds provide a fixed amount of income at regular intervals in the form of coupon payments.
- Diversification: Investing in a balance of stocks, bonds and other asset classes can help you build a portfolio that seeks returns but is resilient through all market environments. Stocks and bonds typically have an inverse relationship, meaning that when the stock market is down, bonds become more appealing.
- Risk management: Fixed income is broadly understood to carry lower risk than stocks. This is because fixed income assets are generally less sensitive to macroeconomic risks, such as economic downturns and geopolitical events.
- Invest in a community: Municipal bonds allow you to give back to a community. While these bonds may not provide the higher yield of a corporate bond, they often are used to help build a hospital or school or that can improve the standard of living for many people.
3. Stocks, Shares, and Equity
To dive into Stocks, shares, and equity as a student, you would need to understand how they work or you risk losing your investment.
The best way is to read financial educative books and attend training or seminars if you can. The more you know, the better.
You can also look for a mentor, preferably a registered financial advisor who is well experienced. One thing is certain, if you can crack the stock market while still a student, you would make a lot of money.
4. Sign up for a robo-advisor
If you’re not ready to pick individual stocks or even an index fund, then you can opt for a robo-advisor. A robo-advisor automatically creates a portfolio for you, buying a selection of funds based on your time horizon and how aggressive you want to be with your investments. Beginning investors can get started with very little money – even $20 can get you going – and you can add money incrementally without any additional transaction costs.
For their services, robo-advisors usually charge a percentage of your assets, often 0.25 percent annually, though some waive the fee for small accounts. Wealthfront and Betterment are two of the larger robo-advisors that hit this price point.
Typically, you won’t pay any additional fees to the advisor, though any funds you’re invested in usually have fees based on how much you own. You’ll often get other benefits from the advisor, too, including attractive interest rates on cash accounts and you typically won’t have to lock your money in.
5. Open an IRA
It might sound like you’re jumping the gun by thinking about an IRA while you’re in college. But an IRA can actually be a great opportunity to build your future savings if you’re earning money with a job, as many students are. An IRA allows you to defer taxes on any profits or dividends, and deduct your contributions from your taxable income, saving you money on taxes. Plus, the earlier you start investing in a tax-advantaged account, the longer you can use the power of compounding to max out your account.
6. Use Investing app
investment apps are the new guys in the industry. They allow you to make investments in businesses, all from the comfort of your phone.
One of the popular investing app is Acorns, and it is among the top investment apps because of how easy it is to use. With Acorns, you link a debit or credit card, and then the app rounds purchases up to the next dollar and invests that difference into one of a few ETF portfolios. Acorns offers a core all-in-one membership for $3 a month and a family version at $5 a month.
Some of these apps offer up to even 100% return on investment, although the investment fee might be high. You can start low by investing businesses with smaller returns, then grow gradually.
