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How To Invest As A College Student: 5 Things Every Young Adult Should Know 

Whether you decide to put your money in a high-yielding savings account, or even take the risk and purchase a few stocks, investment opportunities are plentiful and it all depends on how much of your money you want to invest and what you want to do with it. The best is to set up a predetermined financial goal, as this will help guide you to better understand how much money you will need and at what time.



The idea that investing is only reserved for older and wealthier individuals is an outdated concept that has for too long pushed younger adults out of the financial market. 

With the advent of technology and digital mobile apps, younger Americans are finding it easier and more convenient to grow their money. The earlier you start, the better as this allows you more time for your portfolio to grow, and garner wealth over time. 

According to a national survey published in 2021 by First in Business Worldwide and Acorns, a financial wellness system, around 37% of 18 to 34-year-olds say they are current investors, with three-fifths starting to invest between 2020 and 2021. More interestingly more than half, or 57% of younger respondents said they currently make use of self-service mobile apps to buy and sell investments.

The growing need for younger, and more mature Americans looking for financial opportunities in the stock and investment market has now seen an explosion of self-service mobile apps come online to help less-experienced investors take a stab at the investment game. 

Though investing remains a highly complex, and risky exercise, several avenues of investing currently exist to help younger participants plan and save for their future endeavors. 

With so much noise surrounding the investment and stock market, it can be hard to figure out where you should start, especially if you have never previously dabbled in trading or investing your money. 

Here’s a breakdown of the most important things you as a college student should know when you start to invest and save for the future. 

Have a savings goal 

As with many things in your life, having a clear-cut financial goal will help you determine how much money you will need to get started, and how much time your investments will need to grow. 

A simple place to start is by reading through some of the guidelines outlined in the investing handbook curated by the Securities and Exchange Commission. This guideline helps young American investors understand the benefits and risks of investing, and how they can align their financial goals with their personal needs or desires. 

Whether it’s saving up for college tuition, looking to buy a car, or simply starting early to build your nest egg, this guide covers some of the most basic principles every young college student should know before jumping headfirst into the market. 

Aside from helping college students understand how to invest, this handout also covers some other important financial aspects such as how to set up a budget, plan and execute financial goals, and introduce you to the smart and easy ways you can save your money. 

Start with a high-yielding savings account 

Though the stock market may provide more rewards, it does however come with a high level of risk that may see any college student losing some of their hard-earned money. 

Instead of taking the risk, experts suggest starting with a high-yielding savings account that helps you grow your money over time. Any person can open a high-yielding savings account, and these accounts often pay an attractive interest on the deposits you make. 

Instead of leaving your money in a regular savings account, or even a check account – where you can easily access it – a high-yielding savings account will benefit you over time, and help you save more frequently. 

As a college student, you can reach out to your financial provider, or read up online to find out which financial institution offers the best and more rewarding savings account for someone in your position. 

Invest in a Certificate of Deposit or CDs

As one of the safest investment alternatives, CDs often pay a fixed rate of interest to individuals who are willing to commit their money to the bank. 

Depending on where you deposit your money, banks will often have different times over which you will be required to invest your money. Something to know about CDs is that once you have deposited or invested your money, you can leave and forget about it until a specific time in the future. 

While there is almost no risk when investing in CDs, the only known time that you will lose money is when you withdraw your cash before the completion of the agreed investment period. The other issue with CDs is that you are physically locking up your savings, and it may take some time for it to be returned or deposited back into your account, so it’s not ideal if you require the money during an emergency. 

Although there are several factors to weigh out, investing in a certificate of deposit remains one of the safest, and risk-free ways to help start your financial portfolio at a young age. 

Understand the different investment options

We’ve already touched on two types of investment options you can consider, but these are only considered to be the tip of the iceberg in the greater scheme of things. 

With so many different options available, it can feel almost intimidating to choose one that fits your financial position, while also ensuring that it aligns with your personal savings goals. 

Other investment options that you might be able to consider include: 

Money-Market Funds

Typically a money-market fund will invest in short-term debt securities such as U.S. Treasury Bills or commercial papers. The funds are open-ended mutual funds with low risk but have a slow rate of return. It’s another safe place to park your cash and helps to diversify your portfolio, but growth on these types of investments isn’t typically generous. 

Mutual funds

Another straightforward investment option is depositing your cash into a mutual fund that diversifies your investment into different assets such as stocks and bonds. These funds are typically managed by a fund manager, who will choose the assets in your portfolio based on your criteria. Usually, these funds grow over time, and it gives you a bit more portfolio diversification, but seeing as someone is managing your funds, you may be required to pay a monthly fee or commission. 


Nowadays stocks are all the rave, mostly due to the fact that shareholders can garner sizable returns on their stock purchases. Stocks can provide solid returns, but you may be exposed to high levels of risk and volatility. Seeing as you are physically purchasing a piece of a public company, your stock performance may be subject to market conditions, company growth, and overall macroeconomic conditions. 


For new and young investors, bonds may seem like a strange concept at first. The best way to understand bonds is that it’s considered a loan from a person or investor – yourself – to a borrower. The company will use the money that you have lent them to fund other projects. Usually, the borrower or investor will receive interest on their investment, though the percentage thereof will depend on the investment agreement. 

ETFs or Exchange Traded Funds

Another option to consider is ETFs, which are a collection of different assets that typically follow a designated index, sector, or commodity. There are dozens of ETFs, and you may end up with an ETF that follows or tracks stocks such as tech or healthcare. This is a smart, yet practical option for newbie investors who want to have access to different stocks, without having to research and analyze each of them beforehand. 

Use a robo-advisor 

If you have never heard of a robo-advisor, we don’t blame you, as the concept is relatively new in terms of investing. Robo-advisors are autonomous investing applications that help you automatically create and set up an investment portfolio. The robo-advisor will typically select stocks and other assets based on your financial position and your financial goal. 

These advisors are affordable and simple to use and you have constant access to your portfolio and investments. As your portfolio starts to mature, you can either add more money to help boost your investments, withdraw your earnings, or leave it to grow over time. 

There are several ways you can go about robo-advisors, one of which includes a service commission fee, typically 0.25% annually of your investments, or pay a small fee that is charged to your account. 

Additionally, you may be subject to a fee on any of the funds you’re invested in, and this is usually calculated on how much you own. Several large-scale companies offer robo-advisors that can help any college student breach into the investment market. 

Final thoughts 

Whether you decide to put your money in a high-yielding savings account, or even take the risk and purchase a few stocks, investment opportunities are plentiful and it all depends on how much of your money you want to invest and what you want to do with it. 

The best is to set up a predetermined financial goal, as this will help guide you to better understand how much money you will need and at what time. This will then lead you to the right investment opportunity, and depending on the amount of risk you want to be exposed to, you will be able to make investment choices based on these factors. 

For college students, it’s best advised to take lower-risk investment opportunities when starting your portfolio, and only consider riskier bets as your portfolio starts to mature over time. The sooner you start the better, and it’s easy because you don’t need thousands of dollars to start saving, all it requires is a bit of patience and some time, and in no time you’ll be on your way to growing your portfolio. 


(Featured image by Brooke Cagle via Unsplash)

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Jacob Wolinsky is the founder and CEO of ValueWalk. What started as a hobby ten years ago has turned into an acclaimed financial media empire with over five million views a month. Before doing ValueWalk full time, Jacob worked as a private equity analyst, small-cap stock analyst, and in hedge fund business development. Jacob lives with his wife and four kids in Passaic, New Jersey.