Investing for college student

Don’t Waste Time: 7 Best Ways While Investing As A College Student

  Have you just entered college? Then you must wish to Invest as a college student to make the extra income. I know investing for college students is a bit difficult due to lack of funds. But how do we get money to eat that pizza? Suppose you are eating a pizza that costs RS 500 and I know we don’t just buy only single pizza a month.

Even if you invest the price of one pizza i.e. RS 500 into the stock market then after 20 years it would become close to Rs 5000. Does It mean 1 pizza costs you Rs 5000, not Rs 500? 

investing for college student
Source: Groww

Importance of investments for students

I might sound like an old uncle to you but the reality of life is if you want to live a life that others can dream of then you have to stop acting like 90% of people. I am not saying you should invest all your savings and do nothing in college.

But I mean to say – invest a bit as a college student to gain exposure to the world of finance. Investing is a skill that is never taught in any college.

Morgan Housel, the author of the bestseller book,” Psychology of money” told the importance of investing through his podcast. The author’s father could leave his boring job just because he (the author’s dad) had high savings. On the other hand dad’s colleagues couldn’t leave their job because they focus on living a high-standard lifestyle that they couldn’t afford.

The habit of investing not only helps to make the money but it leads to freedom and autonomy for the author’s dad. I hope with the help of this story I was able to convince you of the importance of investments for a student.

1. Index fund

I know some of you might not have an interest in the stock market or you want to focus only on curricular activities in college then investing in an Index fund is the best decision you can make.

An index fund is simply the collection of top companies in the country. One can invest in nifty-50 which is a basket of the top 50 listed entities of India.

Investing in index funds is not rocket science as it is more stable, and low risky compare to small and mid-cap stocks. All you need is to select the right fund and invest. You can invest in any of these best index funds all of them have proven themselves through their historical performance.

  • UTI Nifty Next 50 Index Fund Direct-Growth
  • Axis Nifty Next 50 Index Fund Direct-Growth

Congratulations! you have just invested in India’s top Index fund.

As a college students, we think twice before spending money so I have one good piece of news for you. As index funds are passively managed so the expense ratio is way lower than a typical mutual fund. so, it automatically saves your returns from the mutual fund manager.

2. Self- Investing for college students

If you are reading this blog till now then you must have deep excitement and hunger to learn about Investing.  I bet if you spend some time learning about the stock market then you would fall in love with it.

If you want to experience the thrill then investing in IPOs and penny stocks is a good idea. Sarcasm aside, on a serious note – the thrill of the day can cost you a loss of your capital. Because we all know not a single big IPO has given positive returns in the long term. But don’t worry I am here to tell you the right way of investing as a college student.

 I personally have made money in the bull markets and lost in bear markets. So, I can add my experience and knowledge that you can get benefit from.   

To start investing you only need the Demat account from trusted brokers. A Demat account is like a bank account and is important for buying and selling of shares.  

How to start investing as a college student?

  1. Choose the best broking platform (I recommend Zerodha or Groww)
  2. Make a Demat account
  3. Add money to the account
  4. Choose which stock to invest in and bang on.

 You just have started investing as a college student. Now you are ready to invest but hold on for a minute let me tell you some strategies which will make your investing journey a bit easier.  

3. Risk is not your enemy

Equity investing is a risky game but good thing is that the stock market gives a high reward for the risk taken. We have a tendency to run away from taking risks but my friend risk is everywhere from walking on a road to paying your college fees.

You always have to choose your risk. One should take high risks in college life as you don’t need to pay any kind of rent or bills. Believe me, you are in the best phase of your life so take risks, and invest wisely.

4. Invest like a Pro

People think that they are investors just by opening a Demat account. But before investing you will need some basic understanding of the stock market.

What’s the better way than learning from someone who himself has made huge money from the stock market? People like Warren Buffet, Rakesh Jhunjhunwala, and Ramdeo Agarwal are all well-known investor who has a sound understanding of the market. One can learn the mindset from them which is needed to become a good investor

You can learn about the basic ratios from our blog where we have covered the ratios in detail. Click here

5. Growth Stocks

Being a college student, you should take high risks in the stock market so, growth stocks should be an ideal investment for you.  The companies which are in their growth phase and growing at an impressive pace are called growth companies or growth stocks. This kind of stock usually trades at a higher price hence there is some level of risk associated with it. But the risk-reward ratio is also high in such situations.

Such companies pay less or zero dividends to shareholders as they invest this capital in the growth of the company. So, my advice would be to invest in the growth stocks which are the best stocks for college students to invest in.

These are some best growth stocks for college students which can give good returns even before completing your degree.

Dmart:

Dmart is aggressively increasing its stores and planning to open its stores all over the country. Their revenue, as well as profits, are also increasing at an impressive pace. If they keep growing at such an astounding pace then it can generate very good returns for its shareholders.

Despite the pandemic, which brutally impacted the retail sector, the sales growth and profit growth still are double-digit.

Deepak Nitrite:

Deepak Nitrite is a leading manufacturer of specialty chemicals. It has a market share of 70% in Sodium nitrite and sodium nitrate production.

Due to heavy demand for specialty chemicals the company is heavily investing in setting up new plants, almost 1000cr will be invested in FY22-23. The 3-year sales growth is 36.07% while the 3- year profit growth is 82.28% which is simply brilliant.

Dixon Technologies – The Brand behind the brands

It is the biggest manufacturer of LED TVs in India. The brands like Samsung, Xiaomi, One Plus, Panasonic, and Philips are regular customers. It is one of the biggest beneficiaries of PLI (Production Intensive Scheme) under the government of India scheme.

The three-year profit growth and sales growths are 44% and 53% which is quite impressive. Despite being a capital-intensive business, that requires lots of cash to manufacture goods, the debt-to-equity ratio is only 0.47.

6. Small Case

The small case is the basket of 50 stocks, made by the Sebi registered stock brokers. The main advantage of the small case is that you can shuffle the portfolio as per your knowledge and understanding.

You can invest in specific themes like EV. If you are bullish(positive) on the agriculture sector then you can invest in the agriculture theme. 

7. Best Investment Plan for College Students

No plan is a perfect plan even the biggest investor also fails 10 out of 4 times. But one should always keep one thing in mind, never invest all your money at once, and have some money as an emergency fund.8.

Don’t invest as a college student!

Lots of people suggest focusing only on curriculum and advise college students to avoid investing in college life. They are not wrong that a college student should focus on building skills that will land you a job but investing is also a skill. When you start investing early it gives you an edge of age. Starting investing in the 20s vs 30s can bring a huge difference which is difficult to fill later.

         Lack of financial knowledge is the biggest reason why people live mediocre life despite having a good salary. Investing in the stock market not only makes wealth but also it teaches you the skill of financial planning.

Review your portfolio periodically

It is very important to take follow up on your portfolio from time to time. Checking your portfolio on daily basis can’t help you grow your money significantly. The daily chaos in the market only makes you demotivated by the constant up and down in the market.

Experts suggest that an individual should review his portfolio on a quarterly basis. If the company fails to give a good quarter, then exiting from such companies is the best strategy. One should invest in a company that is beating its own records quarter on quarter in terms of revenues and profits.

FAQ:

1. Do we need a Demat account to invest in an index fund?

A Demat account is mandatory for investing in equity. But if you are investing in an index fund then there is no need for a Demat account.

2. Should you invest if you have a student loan

Ideally one should start investing only after completing the Emi loan. But if the interest rate of your loan is lesser than the standard returns of the stock market then you should consider investing in the stock market.

Don’t make your loan a barrier to entry into the stock market.  You can make more money if you invest sensibly.

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