4 Easy Ways to Invest Money While in College

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July 10, 2020

Are you in college and want to get into investing but not sure where to start? Find out 4 easy ways to start investing while you're still in college.

If you're a college student looking to get into the world of investing, then first off I want to say kudos to you. Investing while you're in college is no small feat.

This means that you (hopefully) don't have any debt such as credit card debt or student loans. This also means that you have a considerable emergency fund saved up. This should be a 3-6 month emergency fund that can cover all of your expenses in the case your usual form of income disappears.

Paying off all your debts and having a solid emergency fund while you're still in college is quite the milestone. You have to be disciplined and determined to be in control of your finances at such a young age.

Check out these 4 ways to start investing while you're still in college:

1) Invest in a Roth IRA

I will now and forever invest in a Roth IRA (at least until I am 59 and a half or until I die - whichever comes first). If you don't already know what a Roth IRA is, it's basically an investment account that grows tax-free.

Essentially you put in money you've already payed taxes on. The money in your Roth IRA then grows tax-free. This means that when you are of retirement age, which is 59.5 years old, you can withdraw money from your account without paying taxes on it.

This is the opposite of a traditional 401K. With a 401K, you don't get taxed on the money you put into the account. However, you pay taxes when you withdraw the money, whether it's in 5 years or 50 years. And it's a LOT of taxes typically.

If you work for a company that offers you a match on contributions to your retirement account, then contribute up to their max. Even if they only let you invest in a 401K account, free money is free money.

Once you're receiving the full match from your company, then throw the rest of your money into a Roth IRA. I currently use USAA for my Roth IRA but will be switching my Roth to Vanguard this year.

Vanguard is a behemoth when it comes to low-cost funds. John Bogle, the founder of Vanguard, essentially invented the index fund. I plan on investing 90% or more into Vanguard index funds. They have low expenses and typically just track market indices. If you want to read more about index funds and what they are, then check out how to become a millionaire through index funds.

2) Open a Robinhood Account

Another way to invest your money while in college is to open a Robinhood account. If you haven't heard of Robinhood, it's a free stock investing app.

When it comes to stock buying and selling, you almost always have a fee attached to trade. Not with Robinhood though. You can actually buy and sell stock for free with them.

I started using them and they really are free to use. They have an easy to learn app and you can even get a random share of stock if you use my referral link to sign up for a Robinhood account.

I actually found a stock ticker with my name, ERIC. And yes, I did buy a share of ERIC :)

3) Use Automated Investing Through Acorns

Another great app you can use in college to invest is called Acorns. Acorns is an automated investing app where you basically just set it and forget about it.

Acorns was founded on a cool concept. You can link it to your cards and every time you buy something, it will "round up" your purchase to the next dollar. It takes the spare change and then invests that change for you in mutual funds that you pick.

My wife uses Acorns too and she loves the Found Money feature it has. Basically Acorns has a lot of partnerships with companies and you get a discount if you go from Acorns directly to these companies websites or apps. It's a cool bonus to get a little extra money invested in your Acorns.

You can withdraw your money from Acorns at any time. You will have to pay normal capital gain taxes on anything you make just like with an online brokerage account with I'll talk about next.

Acorns typically costs $1/month, but it's actually free if you're a student! Just sign up with your school email and you'll be good to go :) 

Both you and I will also get a free $5 if you sign up through my Acorns referral link.

4) Invest Through a Traditional Online Brokerage Account

If you want to invest the "old school" way, then you can open up an online brokerage account with companies like TD Ameritrade or Fidelity. I have accounts with both. TD Ameritrade was the first trading platform I became familiar with.

When I was in middle school, I was actually homeschooled for a couple of years. My Dad would be at work and would tell me to watch certain stocks for him for the day. I would follow the prices every hour or two and if they dropped low enough or rose high enough, I would call him and let him know so he could buy or sell at the right time.

I learned a lot during the time I was my Dad's secretary watching his stocks. I bought and sold some stock in high school and learned more. I didn't make much money but I didn't lose any either. I ended up coming out pretty much even but having learned a lot.

Last year I decided to open an account through Fidelity because they have lower fees to trade. Fees really add up when you're buying and selling stocks. If I buy individual stocks, I also try to buy or sell at least $1,000 worth of stock to minimize the expenses. Even that would come out to a 1% fee overall, which is still pretty high.

My goal for this year is to max out my Roth IRA. I won't be buying anymore individual stocks until I have my Roth IRA account funded. It's more important to fully fund your Roth IRA than it is to buy stock in a regular brokerage account.

If you're just a college student and just want to dip your feet in the world of investing, then try one of the above ways. It really is so simple to get started on Acorns or Robinhood. You'll learn a ton and you'll thank yourself 10, 20, or 30 years down the road.

Roth IRAs really are so powerful as well. If you want to see just how much a Roth IRA can change your future, check out this future Roth value calculator.

The most important thing you can do today is just start! Pick one way and go for it.

You got this!

Just so you know, I only recommend products and services I believe in 100%. I may receive commissions from products linked to this page.