Ways to Invest While Still a Student

Starting to invest while still a student is the most difficult thing to do, with that extra change you are always thinking of what to buy or the things you could do with it. Investing might be the last thing on your mind but, getting started will be the best thing you could do while you are a student.

Being a student comes with so many challenges and it is a life-changing shift. This is where independence creeps in and it is the best time for you to create a foundation for the type of life you want to live in preparation for your future. The financial decisions you make at this level of your life may affect your life in the coming years.

To secure a great life after varsity or college, it will be a wise decision to start investing the little that you have while you are a student and secure your financial freedom.

It is not always possible for students to start investing due to finances but, this is a great strategy on a number of fronts for those who have the means to start investing while in college.

Find out the different ways you can invest and how you can go about doing it.

Create A Savings Plan: Only Invest in What you Can Afford

You will have to start working on a workable savings plan, for example saving 5% of your monthly allowance or more. Start by creating a budget, mapping out all your monthly expenses. This will help you manage your expenses well and give you an idea of how much you can put into an emergency fund and how much you can use for investments.

Tax-Free Savings Account

Putting your money into a tax-free savings account is a workable short-term investment plan. A tax-free savings account allows your money to grow without you paying tax on the growth of your investment, interest, or dividends. You can invest from as little as R250 and you can have access to your money when you need it. Old Mutual, First National Bank (FNB) and other major banks and credit providers have different tax-free savings solutions that may be what you need to start building your investment portfolio.

Assets you Could Invest in:

1. Stocks

Investing in stock can be a good move. By buying stock, you will be purchasing a percentage of a company – giving your money the potential to grow as the company increase in value over time.

Yes, this might be a risky move as nothing is guaranteed in stock investments, the company could decrease in value after your stock purchase. So, you will have to make a bold move and be sure of what you are getting yourself into before you consider buying any.

I would advise you to do your research on this to find out which stocks are currently doing good in the market, so your money doesn’t go to waste. It is best to invest in stable companies that have a good track record and show continuous growth. With all the risks that can be incurred in investing it can be extremely hard to decide on the best stock to invest in so to get started, you may want to do a comparison of which companies did well in 2021 and which ones are best to invest in this year.

You do not have to have a lot of money to start investing in stock, for best results you can start from at least R5 000. If you do not have such an amount right now you can start by saving from the little you are left with from your monthly allowance till you have the recommended start-up amount.

There are several platforms you may use to make your purchases, with EasyEquities being a reputable one. You may also buy stock via a Financial Service Provider like Absa or via an Exchange Traded Fund Stanlib.

3. Mutual Funds

Unlike stocks, mutual funds are more balanced and less risky as professional fund managers are in charge of your investment and they take care of all major investment decisions on your behalf. They take the money that you put in and invest in multiple assets.

With mutual funds, each share represents your ownership of the fund and the income it generates. You can find out more about the top performing unit trusts in South Africa.

3. Real Estate

There are several ways in which you can invest your money in real estate, depending on what you plan to achieve with your investment. From this, you will get to see that investing in real estate does not require a lot of money as it is also possible to invest without money.

Real estate investment can grow your portfolio beyond publicly traded company stocks or mutual funds. You may invest in Real Estate Investment Trusts - REITS as it will enable you to invest in commercial real estate property without actually buying and managing those properties.

Remember, all investments involve risk, some are even riskier than others. Interestingly, the riskier the investment the more potential of earning higher returns. You will have to decide on what works for you best but be careful not to put all your eggs in one basket, make sure that you diversify your portfolio.  

Perks of Investing While a Student

Experience: After graduation and ready for the “real world” investment experience will be part of your competencies. You will have the advantage of winning big in the investment world.

Education: The process of investing will give you valuable financial lessons which you can never learn from reading a book, website, and even videos.

Potential: If you were able to save and invest while you didn’t have much, think of what you could do once you have graduated and have a fu-time income.

Nest Egg: You will graduate and have at least a small investment nest egg.

As young as you are, you are in a strong position to start building your wealth. It all begins with you!