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Investing Tips for Students

Like many of you, I was bored out of my mind when the world went into lockdown due to the COVID pandemic. With no work, no classes to be at, and no sports to occupy my free time, I needed something to do besides playing video games and binge watching every show known to man. So around late March last year, I decided to start investing in stocks on Robinhood. I thought, “Things can’t possibly get any worse, we’ll be out of this by the summer”. Clearly, I was very wrong. I lost about 30% of my investment in the first week and thought I had made a terrible mistake. However, I stuck it out and am currently up about 40% on my initial investment. After nearly a year of trading, I’ve learned a lot and have a few tips for those of you wanting to get into the stock market.

1. Do your homework before you invest

There is a lot to figure out before you start investing. I highly recommend doing significant research before actually putting your money into the markets. There are a number of great resources out there like Investopedia, Nerd Wallet, and MarketWatch for you to educate yourself.  You’ll want to know basics like when markets open and close, what kinds of trades you can make, and what various stats mean. You’ll also want to find a trading platform that works for you. I used Robinhood, but I wouldn’t necessarily recommend it after the whole GameStop fiasco. Ideally, find one that’s easy to use and has as little fees as possible.

 2. Set goals and have an exit strategy

 This may be the best advice I can give anyone. HAVE A PLAN. When I first started, I told myself I wanted to invest for one year and I would cash out if I doubled my money. Give yourself a timeline. This will help shape what you want to invest in and how much risk you want to take on. Decide how much you are willing to lose and what amount you would cash out at. Giving yourself these parameters will help you stay disciplined and find investments that fit your goals.

3. Start small

You do not have to invest all of your money all at once. It is completely fine to mess around with $10 to get used to your platform and figure out how things work. I did not do this and it definitely cost me some money early on. Most platforms offer fractional shares, which allows you to invest in any company for as little as $1. I’d highly recommend starting slow and beginning with companies/industries/funds that you are familiar with or have an interest in.

4. Diversify, don’t day trade, don’t panic

There will be good days and bad days. Historically, we know that over a year or especially a few years, you’ll have more good than bad. The shorter the term you invest, the more volatile or risky it is. Don’t sweat one bad day or bad week. The easiest way to decrease risk is to diversify. As you build out your portfolio, just don’t get too heavily into one company or industry unless you’re willing to deal with the risk.

Those are the most important lessons I’ve learned in my brief time investing. I’m not a financial advisor and far from an expert, but after doing a little research it seems like my tips aren’t too far off from standard advice. Investing and stocks in particular, can sound intimidating or scary. If used properly, the market is not a casino (despite what recent events may make you think). Traditionally, it is a solid way to build wealth and put your money to work for you. If you have more questions about investing, feel free to make an appointment with one of our counselors! Good luck, I’ll see you on the moon.

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Last Updated: 2/25/21