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Investing as a college student is a surefire way to jumpstart your financial future and secure funds for your golden years.
Although saving and investing early is the first step, many young adults don’t know how to get started. How much should you invest? Â How much should you save? William Michael Cunningham, president and chief executive officer of Creative Investments Research Inc., a minority-owned research and management firm, recommends visiting sites such as www.vanguard.com and using retirement calculators to analyze your financial decisions.
“Look at how much money you will have in 30 years in various scenarios,” Cunningham says. “The differences can be striking and it’s a good way to look at the long-term impact.”
According to a 2007 report by the Social Security Administration , only 30.8% of African Americans invest and save compared to 49.8% of whites. Â The report also states that those with low income, the less-educated, those under age 30, and minorities, are all less likely to have long-term saving horizons with money earmarked for retire.
Fran Harris, founder of Collegepreneur, an entrepreneur and leadership magazine for college students, also encourages her readers to start early. “Our goal is to turn out a new generation that is going to be richer in many ways,” she says.. But Harris also says that student’s need to do their part and get away from the “I’m a broke college student” attitude.
“That’s a cop out,” she says.
Farrah Gray, a money coach for America Online, says although college students may be strapped for cash, there are simple and practical steps that they Â can take toward investing for their future. After speaking to our experts, BlackEnterprise.com created this guide to get you geared up for financial empowerment.
Do your Research. Read publications –both online and in print — that will educate you on the many different business sectors and stock markets worldwide. Don’t just stick to business publications. Depending on what you’re investing in you’ll need to be knowledgeable about world events because they also affect stocks. Pay attention to minimum balance requirements, fees, service charges, and how much interest you can earn from different investment vehicles.
Types of Investments
Sheryl Ridley-Dorsey, CPA and founder of Black $treet (www.blackstreetinvestmentclub.org/), an investment club for youths ages 10-16, recommends investing in stocks while you’re in college. “You don’t need thousands of dollars to invest into stocks, nor do you need to pay the high commission fees to brokers to buy the stocks of interest,” she says. Â Dorsey points to Dividend Reinvestment Plans (DRIP). DRIPs Â allows you to invest with as little as $10, on a monthly basis or as frequently as you can afford without brokerage commissions or high fees.
If you’re a really conservative investor look into savings bonds. Â They are government protected and federally insured. You can purchase a savings bond starting at $50. Visit www.treasurydirect.gov for more information.
If you have more money to invest, consider a U.S. Treasury Bond. They are issued in $1,000 denominations and pay a fixed-rate of interest every six months. It is a long-term investment with