Investing While in College | Is It Worth It? - Complete Guide - BreadHero
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Investing while in college: is it worth it?

If you are in college I know what you may be thinking; is it worth investing while in college? Often student loans create a dark cloud over your financial freedom and classwork stands in the way of building yourself.

The quick answer is yes. Investing while in college can help get yourself prepared for when you graduate and have to start paying off student loans. While your portfolio should have your college student status in mind, being a college student should not prevent you from investing altogether.

Being a college student myself, I have used some easy to understand strategies to make saving and investing more passive. This way you can still focus on what is most important – school!

worth investing while in college

The Ideal Student Portfolio

The ideal student portfolio is actually going to be a lot easier than you are probably expecting. This portfolio will contain 100% stocks.

The reason for this is because liquidity is very important when you are in college. You are not going to have as much in savings compared to someone who is not a student, so in an emergency you should be able to access your funds.

For this reason we are also going to pick some safer stocks in the event of a downturn. You want to make a return on your money and hedge against inflation, but you should still be risk averse. 

For this reason I recommend picking a handful of safe ETF funds that will give you plenty of diversification. I will lay out some of my personal favorites in this article, keep in mind I am not payed by these funds. 

iShares Edge MSCI Min Vol U.S.A. ETF (USMV)

This fund is awesome for college students because it is overweight low volatility stocks. This means that when the market is in a downturn, this ETF will not get hit as hard.

Top holdings: Newmont Corporation, Visa Inc. Class A, NextEra Energy, Inc., McDonald’s Corporation, Coca-Cola Company, PepsiCo, Inc., Waste Management, Republic Services, Inc., Verizon Communications Inc., Yum! Brands, Inc.

Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

This is a great fund for college students due to the fact that it is not only low volatility, but high dividend as well. This ETF boasts a dividend of 4.30%, which acts as a nice cushion on the downside.

Top holdings: Iron Mountain, Inc., Williams Companies, Inc., Altria Group Inc., Ventas, Inc., Philip Morris International Inc., Simon Property Group, Inc., Kimco Realty Corporation, AT&T Inc., International Business Machines Corporation, ONEOK, Inc.

SPDR S&P 500 ETF Trust (SPY)

SPY is the most widely recognized and oldest ETF, and typically ranks at the top for trading volume. SPY fully replicates the S&P 500. The ETF has an expense ratio of 0.09% and a dividend yield of 1.75%

Top holdings: Microsoft Corporation, Apple Inc., Amazon.com, Inc., Facebook, Inc. Class A, Alphabet Inc. Class A, Alphabet Inc. Class C, Berkshire Hathaway Inc. Class B, JPMorgan Chase & Co., Johnson & Johnson, Visa Inc. Class A.

Vanguard S&P 500 ETF (VOO)

This ETF is great because it has the lowest expense ratio of the group. VOO tracks the S&P 500 and only has an expense ratio of 0.03%. The dividend yield of this ETF is 1.87%.

Top holdings: Apple Inc., Microsoft Corporation, Amazon.com, Inc., Facebook, Inc. Class A, JPMorgan Chase & Co., Berkshire Hathaway Inc. Class B, Alphabet Inc. Class C, Alphabet Inc. Class A, Johnson & Johnson, Visa Inc. Class A.

iShares Core S&P 500 ETF (IVV)

This is another great low expense ration option. This ETF, along with VOO and SPY tracks the S&P 500 index. The expense ratio is 0.04% and the dividend yield is 1.99%.

Top holdings: Microsoft Corporation, Apple Inc., Amazon.com, Inc., Facebook, Inc. Class A, Berkshire Hathaway Inc. Class B, Alphabet Inc. Class A, Alphabet Inc. Class C, JPMorgan Chase & Co., Johnson & Johnson, Visa Inc. Class A.

Invest In Yourself

If you are in college you should know as well as anyone else, investing in yourself is one of the most important investments you can make. There are many different ways you can invest in yourself – school being one of them.

In this regard, I would always recommend investing in some sort of investing book before you get started. Reading is a great way to begin understanding how the market works and how to make better investments.

I actually wrote another article on some of my favorite investing books. The best part about this investment is that it is relatively inexpensive, which is great for college students.

The majority of the books in the article are under $20. I would recommend starting off with one of the beginner books and moving up from there. You can read that article here.

How to Make Saving Passive

In order to invest you first must be able to save. Saving in college can prove to be difficult at times, especially when you are not working strenuous amounts of hours due to being busy with classes.

You need to set up some ways to make saving happen by itself. Something that really helped me was switching which bank I used. I has used TD Bank since I was in high school and I was so stubborn about switching.

I changed my stubborn attitude quickly when I found out how easy Chime banking made it to save money. This is due to two important functions that their accounts offer.

In order to unlock these on your account, you just need to follow two steps. The first one is apply for a checking account on their website. Once you are accepted, you need to activate a savings account with them.

This can be done easily in their mobile app. Once the savings account is activated you are ready to go.

Save When I Get Paid

The first feature that really helped me save money is the Save When I Get Paid feature. This can be activated within the settings tab on their mobile app.

This feature will automatically save 10% of every direct deposit made into your account. I personally found that 10% did not effect my pay too negatively and I barely noticed it being taken out.

This is something that you should be doing anyway, rather than spending everything that you earn. Chime automating the process for you holds you more accountable to actually save your money.

Purchase Round Ups

The second feature that really helped me save money is the Purchase Round Ups feature. Like the Save When I Get Paid feature, this can be activated within the settings tab on their mobile app.

This feature will automatically round up all of your chime debit card purchases and deposit the difference into your savings account.

This only slightly raises the prices of purchases that you make. Depending on how many things you purchase, the savings from this feature can really add up quickly.

I also really enjoy this feature because it takes the thinking out of saving. If you are going to be making purchases anyway, why not make them more beneficial for your future?

Investing While In College Can Be Easy

Now that you have ways to make your savings automated, you can regularly move portions of your savings into your investment account. 

When you are just getting started with investing I recommend opening a Robinhood account. There are no commissions to invest and you can do everything on their mobile app.

When you sign up on Robinhood using this link, you also get a free stock of up to $200+ to start out! Start using these methods of savings to slowly build up your investing account, and you will thank yourself down the road!

Chime

Promotion: $50 Sign Up Bonus

Earn $50 when you register an account and make direct deposits of $500 or more within a month.

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