Investing has always been an interesting and trending topic. The global investment market size reached the point of $3837.1 billion in 2023, and it keeps expanding at a compound annual growth rate (CAGR) of 8.6%.
As many people already know, investing can bring valuable benefits both in the short-term and long-term perspective. Due to this reason, according to a Gallup survey, around 150 million US citizens are already investing in stocks, and students are among them.
For students who live on tight budgets and have plenty of expenses to cover, investing is a unique opportunity to earn an extra income and save money for the future. Moreover, unlike a traditional job that’s hard to combine with studies, investing can be done without any harm to your academic performance. You might need to use nursing essay writing services at first to support your studies as you try to get into this world, as it can be pretty confusing. But once you get a grasp on things, you can combine investing with your studies.
Interested in learning more? Then read on, and we will give you a thorough guide on how to enter the world of investment and start building your stock portfolio!
What Are Stocks?
Let’s begin with the basics. Stocks are basically the shares by which the ownership of a particular company or corporation is divided. Owning the stock of a company means having fractional ownership of it in proportion to the total number of stocks (shares).
Types of Stocks
Today, stocks are defined by the ownership type:
- Common—Gives you dividends, as well as the right to vote on key matters;
- Preferred—You won’t get a voting right but will get dividends ahead of common stockholders.
Also, stocks differentiate based on each specific company’s market capitalization. Respectively, there are large-cap, mid-cap, and small-cap stocks. There are also domestic and international stocks that belong to domestic and international companies accordingly.
Most importantly, you need to know that there are two kinds of stocks based on their value:
- Growth—Stocks of high-growth companies, such as Tesla or Apple. These can offer high rewards, but their prices can get to overvalued levels. Investing in them is best at a compelling price.
- Value—Stocks of companies with lower growth rates and lower valuation multiples. They are cheaper, yet can bring some great rewards. Namely, the world’s top investors like Warren Buffet made their fortunes by investing in cheap but promising stocks.
What Is an Investment Portfolio?
A portfolio that you will be building is basically a collection of all stocks (assets) you invest in.
There are four main types of portfolios based on the purpose:
- Conservative—Long-term portfolio with low risks, meant to preserve your investment fund.
- Aggressive—Short-term portfolio with more volatile investments and high risks, meant to grow assets quickly.
- Income—Long-term portfolio meant to offer you a regular and reliable income.
- Socially responsible—Long-term portfolio meant to provide you with income while also doing something good for society with your investments.
How to Build Your First Investment Portfolio as a Student
Now that you have a general idea of stocks, their types, and different portfolios, let’s get to actionable tips.
Here’s what you need to do to create an investment portfolio in college:
- First, set specific goals and identify your time horizons. Decide whether you will engage in short-term, mid-term, or long-term investment.
- Define your budget and risk tolerance. At this point, you have to be incredibly cautious and decide how much you REALLY can afford to lose.
- Create an investment account that matches your goals.
- Consult with an expert to get some guidance.
- Define the type of stocks you want to invest in. When choosing, keep in mind your risk tolerance and budget.
- Focus on diversity and asset allocation. Many beginners tend to invest everything they have in one or a few stocks, which can lead to increased risks. Expert investors always suggest staying away from putting all your eggs in one basket. Instead, focus on asset allocation and diversify your stocks to minimize the risks.
- Monitor, rebalance, and adjust your assets. Even after you hit “buy,” you can’t just forget about your portfolio and get back to it later to collect rewards. In fact, investing is an ongoing process. You need to provide regular attention and maintenance to your portfolio to get the best results. Thus, enlist the help of the top paper writing services to have more free time and monitor and adjust your portfolio like it’s your full-time job.
Now you know everything you need to start investing. Use the knowledge and tips from this article to build your first stock portfolio while in college. Good luck!