Three Tips to Start Investing as a College Student – by Chrissy Davidson

A recent report by the Ministry of Education revealed that student loan debt in New Zealand has increased by 37 percent with the average student owing $21,000. More than 90 percent of students borrow money to pay for their college education and have no way how to pay off their debt. However, student loans can be a great way to start managing your money and learning how to invest early in life. With just $100-200 of investment per month, students have paid off their loansin a couple of years. So, with the right advice and time, you can learn investment skills that will pay off your debts and last a lifetime.

Do Your Research

Just likeany subject in school, research is the key to learning about investments. None of us are born experts and the way that you obtain knowledge is to dive right into the research. You should check out books about analyzing stocks, bonds and mutual funds to help you determine a winning investment strategy. You may also want to enroll in an investment class through your school or a financial organization so that you can get hands-on experience. This will not only help you understand the tools of the trade better but is also a greataddition to your resumeif you’re looking for any finance-related job.

Figure Out How Much You Can Invest

After you’ve done your research, you can start to make steps towards investment. The first step is to determine how much extra money you have on-hand that you can afford to spend elsewhere. In general, you should have about six months of savings to cover any of your personal expenses such as any loans, insurance costs, utility bills, or rent. Once you’ve saved about six months for emergency funds, you can start to invest your money. You may want to start with 10 percent of your monthly income as a base.

Start with Mutual Funds

You will want to diversify your portfolio but stick with low-cost mutual funds and exchange-trade funds (ETFs). These options are great for first-time investors because they allow you to invest in a broad number of diverse stocks in one transaction rather than figuring it out on your own. This makes it cheaper to invest since you won’t have to pay multiple trading commissions and safer since you’re diversifying your assets. You can buy mutual funds through brokerage accounts but you can save some extra cash by buying directly from a mutual fund company. Find a transaction-free mutual fund broker and you can save up to $20,000 over the course of 30 years.

Grow Towards Individual Stocks

After you’ve gotten your feet wet with mutual funds and ETFs, you may want to move on to individual stocks. However, if this is your first time, you should start slow before you gain momentum. Don’t invest more than 10 percent of your assets into individual stocks at one time until you get comfortable with a particular stock. At first, you will also want to partake in the «buy and hold» mentality, meaning you should hold your stocks for awhile, regardless of fluctuation in the market.

The earlier that you start investing, the more time you’ll have for your money to grow. Therefore, you should start learning now and eventually, your student loans will be a thing of the past.