How to Start Investing in College (Even With a Small Budget)

For many people in their twenties, investing can feel intimidating. It might seem too risky, too complicated, or like your budget is too small to make a real difference. These are all common feelings, but this post will help you move past them and show you how to start investing with confidence.

1. Do not let your budget affect your effort to begin investing

A couple of years ago, I read an article about young people giving up on investing because they thought small amounts, like $500, wouldn’t make a difference. However, that same $500 could nearly double in about 10 years, assuming a 7% average return. The earlier you start, the more time your money has to grow.

2. Learn the basics

Once you overcome that first hesitation, it’s time to understand the foundation. Investing is simply putting your money to work for you over time. When you invest, you buy assets like stocks, bonds, or funds that can grow in value or earn income.

• Stocks: Partial ownership of a company.
• Bonds: Loans to companies or governments that pay interest.
• ETFs (Exchange-Traded Funds): Bundles of stocks or bonds you can invest in all at once, which are great for beginners.
• Compound interest: When your earnings start earning more earnings over time.

3. Use student-friendly investing platforms

Several platforms are designed for beginners and students, offering low or no minimum balances. Some great options include:

• Fidelity or Charles Schwab: Beginner-friendly with no minimums.
• Vanguard: Great for long-term investors focused on ETFs or index funds.
• Robinhood or Webull: Simple mobile apps (though avoid over-trading).
• Acorns: Automatically invests spare change from your purchases.
• SoFi Invest: Offers free education and sometimes cash bonuses for signing up.

If you’re under 18, you can start with a custodial investment account with the help of a parent or guardian.

4. Open a Roth IRA if you have income

If you work part-time or have any earned income, a Roth IRA is one of the smartest investments you can make in college. You contribute after-tax money, so your withdrawals later are completely tax-free. Your money can grow for decades, and you can take out your contributions (not your earnings) anytime without penalty. Even investing $100 here and there can set you up for a strong financial future.

5. Focus on index funds or ETFs

Picking individual stocks might sound exciting, but most students are better off starting with index funds or ETFs that automatically spread your investment across many companies. This reduces risk and gives instant diversification.

Some strong beginner ETFs include:

• VTI (Vanguard Total Stock Market ETF): Invests in the entire U.S. market.
• VOO (Vanguard S&P 500 ETF): Covers 500 major U.S. companies.
• ITOT (iShares Core S&P Total U.S. Stock Market ETF): Another all-market option.

With funds like these, you don’t need to constantly check prices or stress about short-term changes.

6. Avoid common mistakes

Investing is exciting, but it’s easy to fall into traps.

• Avoid chasing “get rich quick” stocks or crypto hype. Slow and steady wins in the long run. For beginners, buying and holding is best. I don’t recommend options trading, and I don’t do it myself.
• Don’t invest money you can’t afford to lose. It helps to have an emergency fund. Personally, I keep enough to cover about a month of expenses that’s easily accessible.
• Don’t check your account every day. Investing is long-term. I check mine about once a month because I’m not planning to sell anytime soon.

If you’ve made it this far and still feel hesitant, ask yourself – what do you really have to lose? You might say, “money,” and you’d be right. But taking that first step into investing changes how you think about money. For me, it helped me become less attached to it. It reduced the greed and fear that ruin so many investors.

By taking a small risk early on, I learned lessons that made me a better investor today. I learned what works, repeated it, and stopped seeing investing as risky – it became rewarding. Yes, you can lose a little at times. I have, my family has, and my friends have too. That’s normal. What matters is learning from those experiences and growing through them.

Starting small might feel insignificant, but it’s one of the most impactful choices you can make for your future self.