We talk often about the various benefits of college degrees. Undergraduate degrees are viewed as essential milestones to setting up future professional lives; graduate degrees are typically billed as qualifications leading to specific great paying jobs and careers. What we don’t discuss as frequently however is how students can start to cushion their financial futures en route to securing these degrees.
In some respects, the idea is a lot to ask. Most students don’t have extra cash on hand, particularly given the famously high cost of graduate programs today. Furthermore, students working toward their degrees don’t have the time to devote to significant investing efforts. Even given these caveats though, there are some simplified forms of investing available today that do give students ways to invest — even if only with small amounts of money to begin with.
Mutual and Index Funds
For those who want to invest financially but may not have the time or experience needed to manage funds, mutual and index funds are often appropriate solutions. These two options work in different ways, and have different rates of return (with some pointing to index funds in recent years as slightly favorable options). From an investor’s perspective though, they offer similar opportunities to buy into funds that are managed either automatically or by professionals. As the investor, it’s still your responsibility to decide how much to contribute, when to contribute, and when to withdraw funds (and hopefully gains!). But the day-to-day trading is taken care of, which can certainly be appealing for busy students.
A lot of students may be familiar with the idea of real estate as a popular alternative to market investing. Here, too, the funds, time, and effort needed for traditional investing activity are well beyond the means of most. This is where REITs can come in handy. An REIT is a “real estate investment trust,” which is basically a bundle of real estate assets you can buy into, almost like you’re buying into a fund or a single stock. A student can make this kind of investment with just a few hundred dollars, and enjoy portions of gains from the bundled real estate assets — all without having to make additional decisions or devote much extra time.
As with real estate, gold is commonly proposed as an alternative to stock investment — as well as one with a reputation for being fairly stable, and for rising over time. Students shouldn’t necessarily take that reputation at face value (no investment is ever entirely “safe”), but gold is still a viable option. And investing through gold ETFs in particular makes for a fairly convenient option for people who may be too busy to be in charge of regular portfolio management. It’s not a perfect comparison, but a gold ETF is more or less like an index fund for gold, bundling together multiple assets that move in relation to the price of the precious metal, and making them investable as a single, stock-like entity. Students exploring this option will have only one asset to manage, even if it is tracking the movement of multiple entities.
Savings accounts require virtually no effort, and while they provide only a modest return, they can help to grow funds over the course of a university and/or post-graduate program. Furthermore, there are also various forms of high-yield savings accounts that will increase that return in relation to specific conditions (such as a given minimum deposit, or a set amount of time for funds to be left in place). Students who wish to grow their wealth but want to take the most conservative and effortless approach possible would do well to look into these accounts.
Passive Investing Apps
Today, another option is to look into passive investing apps. An app called Acorns is largely credited with pioneering the low-cost passive investment trend, though it now has its competitors (such as Ellevest, for instance). But basically, apps in this category take spare change (sometimes rounding up your debit card purchases to the nearest dollar) and invest it in funds and assets according to users’ general priorities and loose direction. These apps — appropriately — are not billed as ways to build up massive sums in short time. But for those who want to be investing and don’t have the time or expertise to work on it, passive investing apps can be helpful options.
Students’ primary focus should remain on the degrees they’re pursuing, which will set them up to pursue professional lives and regular income. The impulse to start building wealth along the way is understandable, though, and the methods listed above provide opportunities to do so without a lot of money or time on hand.
Featured Image: Austin Distel, Unsplash.