Six Ways to Start Investing and Saving as a Student with Under $1,000

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If you are looking for ways to invest and save your money as a student with a limited budget, this article will give you some quick tips that will guide you through the process.

Are you a student with $1,000 looking for a perfect investment opportunity? Well, you’re in luck because you’ve just landed on a ton of investment ideas. Most of the time, people believe you need millions to start investing.

However, the truth is you need as little as $5. Nevertheless, as you may have heard already, the higher the risk, the greater the returns. Starting with $5 and making a 100% return on investment will yield another $5, which isn’t impressive for anyone looking to make major investment moves.

With $1,000, now you’re talking. There are various investments you can consider as a college student. Apart from the beginning capital, you also need dedication and commitment to the idea, consistency, faith, and above all, patience to wade through difficult times. 

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1. Mutual Funds, ETFs, and Stocks

You must be thinking equities are for wealthy, older folks with a ton of experience in the industry. This is partly true, however, thanks to technology, you can now trade from the convenience of your smartphone.

This breakthrough allows more access to equities than before. In addition, you can start investing with as little as $5 on several online trading platforms. The stock market is highly volatile, but it offers great returns, on average, over the years – up to 7% per year, which is greater than the inflation rate.

In fact, it’s higher than what other investments offer for the same period. However, there are various factors to consider when investing in the stock market.

  • Consider diversifying your portfolio. Investing in a single company is risky because it can go under with all your money. Diversifying, on the other hand, will safeguard your investments.
  • Search for a brokerage company that offers low or zero fees. There are also companies that offer free investment advice.

2. Real Estate

Many people also consider real estate investment as a preserve of the rich in society. Back in the day, this was true, however, in the last few years, many people have joined real estate through a revolutionary method. 

Crowdfunding is the new way to get funding for your start in owning property. Instead of seeking a business loan from a bank, crowdfunding allows you to seek funds from individuals. This means you can become an investor for less than $1,000.

In addition, you don’t need to have any credentials to identify you as an investor. Three platforms stand out from the pack:

  • Fundrise: For as little as $500 and zero to 3% in fees, you can sign up as an investor. This site contains a wide range of property investments. You don’t even need a real estate license.
  • RealtyMogul: Here you can invest in retail, commercial, mixed-use, and residential properties. The enticing part about this platform is investors don’t have to pay any fees. That burden is placed on property owners.
  • Groundfloor: This platform allows a minimum investment of $10 with returns starting from 5%, up to 25%. However, the returns will depend on how long you stay in the investment and what type of property you invest in.

3. Peer-to-Peer Lending

This is similar to crowdfunding, only this time you’ll count on individuals to pay you back instead of companies. The risk is greater because the loans are unsecured.

People try to decrease the interest rates using p2P sources since when they try to search for payday loan near me online, they find much higher interest rates being offered for a short period of time.

However, they can always minimize the risk by joining peer-to-peer lending platforms.

Some of the reputable lending platforms include:

  • Lending Club: This platform sets the minimum investment at $1,000.
  • Prosper: Start lending from as little as $25.

4. Consider Robo-Advisors

As a student, you have a ton of schoolwork. This means you have limited time to follow through on all your investments. However, thanks to technology, you don’t have to worry about your investments.

Instead, you can use a robot or computer software to analyse your portfolio and allocate funds to each sector. In addition, the robot will offer investment advice through the use of artificial intelligence.

You don’t even have to move a finger, and your money will work for you. Cool, right? As a result, you’ll benefit from easy access to your money at any time, reduced fees, and increased automation.

If you’re searching for an easy and hassle-free way of investing your money, robo-advisors are the best way to go.

There are three commonly used robo-advisor platforms in the market:

  • Betterment: Invest as little as $100 by choosing the type of investment you want. In addition, you can also break down your portfolio as you wish. However, you’ll have to pay 0.25% in annual fees.
  • Wealthfront: With a minimum of $500, you can start investing. The platform also charges 0.25% per year to act as an advisor on anything you invest in.
  • M1 Finance: You can invest as little as $100, after which all services are free. In addition, apart from M1 managing your portfolio, you also have a chance to choose what to invest in.

5. Savings Account

A savings account is for those who want to play it safe with their investment. Stashing your money in a savings account will yield some returns but that will depend on where you open one. Traditional banks offer low-interest rates, but online accounts offer slightly better rates.

While the rates may be low, saving is a good financial habit. According to MarketWatch, an Average American only saves 3% of their income. To start, create a simple budget that outlines your income and monthly expenses. 

As a college student, chances are your income is irregular. Most of your income may be from short stints during summer vacations. This is where you’ll draw money for your investments and expenses.

On the other hand, if you have a regular income, consider automating your transfers to a savings account. You can set this up by making an agreement with your bank. 

Another option is using money apps such as Acorns which will round up debit and credit card purchases and transfer the difference to a savings or brokerage account. Ally Invest allows you to set up Roth IRA or traditional IRA accounts and automate transfers to these accounts.

Whichever method you opt to use, it’s important to automate your investments and savings. This way you don’t have to sweat over wealth creation each month.

6. Start a Side Job

It’s during college that business ideas pop up. The main obstacle, however, is funding to start the business. If you have a business idea and believe it can be profitable, how about investing the $1,000 in your idea?

It could be a day care program, catering services, or creating an online course. The best part about starting a business while in college is that you can receive grants from the school or even subsidies in the form of rental rooms within the college premises.

In addition, there’s a lot of free time while in college after completing your classes for the day. Use this spare time to focus on your investment.

You can also choose to work online and leverage your knowledge for money. For instance, if you’re studying programming, you can develop applications or websites for clients online.

This way, you’ll achieve multiple goals at once. For starters, you’ll enhance your coding skills while earning money. In the long run, you can go full-time into the business after gaining experience in the industry.

Final Words

Young people have an age advantage to get started on wealth creation. Forget about the nights out, flashy cars, and expensive lifestyles. Instead, start investing in the possibilities listed in this article.

One final piece of advice is before investing: make sure you research whatever you want to invest in. Going in blind may be detrimental to your pocket and can lead you to massive debts. Happy investing!

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