Top 5 Investing Tips for College Students | Moneyhacker

College students who manage to juggle the expenses of school and life, while still finding a way to save enough money to start investing, are in a phenomenal position. Getting investment accounts set up in your late teens or early twenties will guarantee you have decades to accrue interest, while also insuring you have enough time to weather any potential financial storm. A strong investment account is a diverse account, so if you're getting started in college, you should keep five particular investments in mind. You'll always want to create a mix of investment types, with some liquid investments that are safe, and some risky investments you're getting into long-term. Here are five tips college-age investors should consider.

The first thing you should do is invest yourself in a Roth IRA. It's not exactly an investment, but it's the long-term safety net that you'll count on when you retire. That may seem like a long time off, but that's exactly the point. Investing consistently, even if it's a very small amount, each and every year, will lead to huge gains as that interest compounds.

Next, get yourself into a mutual fund. Again, it's a minor miracle that you've been able to ferret away any money for investments, and managing those investments while maintaining your education and social life might be close to impossible at this point. All mutual funds have a manager, who works day and night to make the mutual fund perform as best as it can. Even young mutual fund managers will know a heck of a lot more about making it successful than you will, so investing your money that way will help guarantee a safe, reliable return.

Even if you haven't even thought about it before, investing in life insurance while in college is a fantastic idea. Again, time is on your side, and you want to use that to your best advantage. Investing in life insurance while in college gives your policy a long time to gain value, giving you small but consistent returns. You'll save a ton of money buying it while you're young, and of course you'll have the peace of mind and protection it brings, if anything terrible were to happen.

The other 'safe' investment you should consider are strongly rated corporate bonds. Whatever money you put here you know will be available to you after graduation, when you need a cash infusion to start your professional life. They won't offer a huge return, but there's very little risk, and the interest rate will always be better than through a standard bank savings account.

Finally, you can push the safety net a bit by investing in a stock index fund. You'll need those opportunities for real growth in your investment, and this will be the spot where that happens. Remember, you may have fifty, sixty, or even seventy years of investment in front of you, and if you look at the history of the market, people that have been able to buy stocks when they're low and hold onto them indefinitely have done the best. You don't need an online bachelor degree in accounting to figure this out, just find yourself a managed stock index fund. This mutual fund will tie into the performance of the overall market, as opposed to individual stocks. So if you're willing to risk part of your portfolio, this is the way to do it.

About the Author: This is a guest article contributed to investinternals.com by Evan Fischer

Source: http://www.investinternals.com/2012/07/5-investing-tips-for-college-students.html

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