Students should start investing early, advisors say
While college students may not be known for having disposable incomes, those that do have options have the ability to go beyond simply having a savings account.
David Gray, a financial advisor with Capital Management in Greensboro, said he sees investing early as a key component to getting on the right track, financially.
“No matter how small the amount, it’s the habit you want to develop,” Gray said. “It’s the thought process that ‘I’m going to pay myself for the future and maybe put off something that would have immediate gratification.’”
Gray’s business partner, Tim May, suggests students begin investing in mutual funds when first starting out.
“They aggregate dollars from various investors,” May said. “Then with a larger pool of money they invest in a diversified portfolio. You’re hiring a manager, you’re hiring someone to invest as he sees fit and hopefully give you a satisfactory return on your money.”
The diversification May mentioned is considered an imperative aspect of investing when first starting out.
Investopedia.com defines diversification as “a risk management technique that mixes a wide variety of investments within a portfolio.”
Diversification protects an investor in the event that a specific stock doesn’t do well. If an investor is hurt financially with one stock, there are other stocks to insulate him from further damage.
Elon sophomore Michael Keenan has invested his income from summer jobs since high school and says he enjoys watching the ups and downs of the market.
“I love it. It’s kind of like a game,” Keenan said. “You can always tell if you’re winning. Am I beating the market?”
Keenan stressed the importance of investing now and researching your options.
“I think there’s a huge benefit to starting early,” he said. “You don’t have a lot of money, so when you make a mistake you don’t loose a lot. It’s a cheap education.”
While some students may write off retirement as far down the road, May said starting early will pay off long-term.
“When you’re in college, retirement seems like an eon away, and maybe it is,” Keenan said. “Too may people today get too close to retirement before they realize they haven’t done what they needed to do in setting money aside.”