Investing for College Students – It Isn’t Too Early

Yes, I know what you're thinking. "What do you mean invest? As a college student, I barely have enough time and money as it is. Sometimes I even have to burn the midnight oil to finish my assignment and my money is just enough for me to survive!"

It's totally fine if that's exactly you right now. Understandably, college students have a lot on their plate.

That said, I also know there are a lot of students who live at home, have plenty of allowances to spare, and want to know more about investing for college students.

Well, if you are one of these people, this article is for you. 

Is it too early?

Is it too early to start investing while you’re a college student? The answer is no.

Even Warren Buffett started investing when he was 11 years old. And that was in the 1940s.

Each year, it has become more and more urgent for people living in Singapore to invest because salaries, in general, are just not increasing as fast as the prices. The longer we go, the bigger the gap will be.

As it is, professionals in their 30s and 40s today are already struggling with their monthly expenses. This is especially true for those who are supporting 3 generations at a time (also known as the “sandwich generation”): their parents, themselves, and their children.

Yet, a lot of people still treat investing like it is an option, a nice-to-have to earn some extra income, or "when I have some spare time, I will do it" kind of thing while they continue to struggle.

So if you want to get a head start, be prepared for your future, or even get out of the rat race earlier than your friends, then no, it is definitely not too early to invest while still in college.

Watch this interview I did for the Women of Wealth series, where Chee Yee shows us that investing knows no age. She's also a college student when she started investing. Listen to her story and be inspired to kickstart your own investing journey.

What should you keep in mind?

Investing can be daunting for anyone new, let alone for students like you, who highly likely had just started managing your own money for the first time ever.

But it is not rocket science, and certainly doable if you stick to the rules closely. Here are 3 things to keep in mind when it comes to investing for college students.

1. Playing it small is fine

Pop culture and movies like The Wolf of Wall Street have taught us that if you want to invest, you must go big or go home.

BIGGEST. MISCONCEPTION. EVER.

Especially for college students, trust me when I say no one expects you to fork out a 5-digit sum when you invest.

Heck, even those who were already in the workforce for a few years, a lot of them still can't afford to fork out big sums to invest.

Instead, lower your expectations, be sensible, and start only with what you can afford.

Depending on what stock you decide to buy, you can even start with a few hundred dollars. If you've got yourself a good stock, it will continue to compound into big amounts over the years. Compounding is all about WHEN you start and less about how much you start with. 

2. Don't get swept away

Investing for college students can get quite intense. When we're at a certain age, it may seem like the most important thing in the world to belong to your crowd of friends or to prove yourself.

Other friends who have also started investing may get you to join in this and that, put money in here and there because of some "hot tips" that have "guaranteed returns."

Word of advice as someone who's been investing for more than a decade -- there is no such thing as "guaranteed returns." The closest thing to that is perhaps only your CPF Special Account.

It is also easy to get jealous or envy your friends when they do better or earn more than you in investing.

Don't get caught up, don't be a victim to the green-eyed monster. Go at your own safe pace for a more sustainable and stable result. 

3. Don't be arrogant

After getting good results from investing, you may feel invincible, or you may feel like you know it all. Well, don't.

If there's one thing that can instantly kill your portfolio or cause it to go downhill, it's arrogance.

The secret to success when it comes to anything really, not just investing, is humility.

If you did not go through proper training or pick up solid investing knowledge before taking action, you need to do that immediately. Because only with the proper knowledge will you have the right mindset and the right chops to make wise investment decisions.

Investing is not gambling, it should not be based on sheer luck or guessing games, but rational know-how. 

But with limited capital, what can you invest in actually? And more importantly, what are the safer options out there?

Where can college students invest?

I've narrowed where college students can invest into 3 things:

1. Stocks

Depending on which exchange you're buying from and how much the stock is per share, you can actually start investing with just a couple of thousand or even a few hundred dollars.

Even though it can be volatile at times, it is also one of the safer investing instruments out there if you know what you're doing. Once you understand the concept of intrinsic value and margin of safety, the daily ups and downs will not have much impact on you.

2. ETFs

Exchange-Traded Funds or ETFs are one level up from stock investing, in that you're investing in many stocks at once, instead of just one.

Traded like a normal stock on the market, ETF is a relatively more stable option as you would be buying into many stocks at one time; which means, should one of the stocks in the fund crashes, its losses will be balanced out by the gains of the other stocks, giving you more stable returns.

3. REITs

Real Estate Investment Trust or REIT, is great if you are looking for a stable source of passive income, especially in Singapore.

Owning and managing most commercial properties around the country, such as hospitals, hotels, malls and warehouses among others, REITs earn from collecting rent from their tenants and use the money to issue steady dividends to their unitholders each quarter.

This is, however, not a great option for people who are looking for capital growth as REITs' share prices are usually quite flat. 

Investing for college students should be gradually normalised, rather than making it to be something that's "for working adults only."

Preparing yourself early financially will not only give you a head start before you move on to become a working professional where you would have more commitments, but it will also prepare you mentally to work smart instead of just working hard.

Why work so hard for money yourself, when your money can also help you make MORE money?

Want to learn a proper and proven way to invest in stocks, ETFs, and REITs? Come to our free investing bootcamp.

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~ Pauline Teo