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Tag: finances

  • 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.

  • The Most Overlooked Factor When Choosing a College

    When choosing the college I was going to attend, the most important factor to me was cost. It was always my goal growing up to be able to affod college on my own, so affordability was key. When it came down to final decisions, I ended up going out of state because tuition was cheaper.

    Heres what I completely overlooked by choosing a college based on tuition costs:

    Location, and more specifically, the cost of living in that location.

    Duh. Why didn’t I think about this?

    Fortunately for me, I go to The University of Alabama.. Alabama has one of the lowest costs of living, so that really worked out in my favor.

    However, I know of others who chose their schools and have to eat up additional living costs due to the city they live in.

    Lets compare the University of Alabama, in Tuscaloosa, AL, to the University of Texas, in Austin, TX. I chose to compare UT Austin because I was about to choose it, and never even thought to check out the cost of living.

    Lets start in my scenario. I live around 10 minutes away from campus, in a 1 bedroom condo. While I do not pay rent, as it is owned, other units rent for $950/month for a 1 bedroom, around 900 SF. I believe this rent has gone up within the past year or two, but it’s still reasonable.

    Comparison time: a one bedroom apartment in Austin TX for student is 545 SF and costs $1785/month! AND it costs $150/month to park your car there (I don’t have to pay to park on my property! 🙂 woohoo )

    So, that’s over double what I would have to pay. Considering this over a course of three years, a student at UT Austin would pay around $35,460 more than I will. That’s a lot of money. That is just housing alone and does not account for other additional costs such as more expensive food, entertainment (oh – and probably having to pay for parking just about everywhere you go)

    If this number isn’t already enough of a disparity to you, lets see put this more in perspective.

    $35,460 is roughly equal to:

    -A 20% down payment on a $177,000 house (which is around the U.S. median for starter homes in some smaller cities).

    -About 70 average used car payments at $500/month (nearly six years of car payments).

    What if this amount was taken on by the student as debt? Here’s what it looks like over time:

    ScenarioLoan BalanceInterest RateTermMonthly PaymentTotal Paid
    Federal Loan$35,4605.5%10 years~$385~$46,200
    Private Loan$35,4607%10 years~$410~$49,200

    So, that extra $35k to sleep in a shoebox could easily cost $10–15k more in interest by the time it’s paid off, meaning they’re really paying $45–50k total for living in a more expensive area.

    What if this cash was instead invested by the student starting at 22? Here’s what it would look like:

    Average Annual ReturnValue at Age 42 (20 years later)Value at Age 62 (40 years later)
    6%$113,700$364,000
    8%$165,700$759,000
    10%$234,600$1,540,000

    So, that “extra” cost of attending a different college doesn’t just cost $35,460 today… it can cost hundreds of thousands, to over a million, in lost future wealth if it prevents early investing.

    With this said, I highly encourage everyone to check out what the cost of living looks like in the area you are interested. I would say the best way to start is just take a look at the cost of apartments in the area to gauge how expensive it could be after you move out of your dorm. It’s also a great idea to reach out to a student at that university as they can give you a heads up on some unforeseeable costs. Another resource I found is https://www.bankrate.com/real-estate/cost-of-living-calculator/. This website can allow you to compare a new city to your current town to see how your current financial situation would look in a different city.