Can I invest as a student / new grad?
Some of you wonder whether it’s possible to do smart investing while still a student/new grad, or do you need to spend time doing industry research. That intimidation can be a blocker to even bothering to get confident on the basics.
Smart investing is 100% beneath your IQ level. YOU GOT THIS. You can invest while studying / working / living your life. No need to dedicate your days to researching the markets - everyday investors like us (“retail investors”) usually don’t.
There are 2 styles of investing: active and passive.
For now, you are the latter.
Say you choose to buy the ETF called SPY which just tracks the performance of the S&P 500 (500 largest companies in the US). This ETF gives you automatic diversification because you’re basically investing in 500 companies at once. Your returns (earnings) won’t be BETTER or WORSE than the S&P 500 average. Over time, the S&P 500 has typically always grown (because, #capitalism), which means your money will too.
📱 FNGO tracks Facebook, Apple, Amazon, Netflix and Google.
♻️ BGRN tracks bonds that fund environmental projects.
🤖 BOTZ tracks the robotics and artificial intelligence industry.
🥑 BFIT tracks the health and wellness industry.
1. SET UP INVESTMENT ACCOUNT. How you actually buy/sell. Either a retirement account or a brokerage account (or both!) works. There are lots of ETFs housed in different brokerage houses (ever hear company names like Charles Schwab, Ellevest, Robinhood etc?). With these places, you literally search for ETFs they offer. (A what’s-what and pros/cons on these companies next week!)
2. SELF-REFLECTION. You’re young, so you can take more risks than people near retirement (who need their investment to convert to usable cash soon). You can ride out market peaks and valleys and stay in the market. But beyond that, the way you decide on ETFs (whether or not you WANT more volatility for the chance of a bigger reward) depends on your risk appetite.
3. MIX IT UP. AKA “allocation.” Whether you allocate more for higher-volatility-higher-return stocks or slow-and-steady-but-lower-return bonds is dependent on your self-reflection above! Reminder on the difference between stocks v bonds and why they balance each other out.
If you ask, “what should I buy”, our answer (or anyone you should trust’s answer) would be, do a mix and no need to obsess. 50% each in stocks and bonds isn’t a bad way to start. On stocks, aim for exposure to companies all over the world and in a diverse set of industries.