The Gen Z Investor

by Christiana Unakalamba 

Figuring out how to get started with investing can be daunting and quite confusing. The fun fact about investing is that you don’t have to wait to graduate before starting! College may seem like the wrong time to scrounge up extra cash to invest. Surprisingly, college years are the ideal time to start investing. This is the time to learn the ropes, make some mistakes, and build for the future. Investing early is one of the best ways to build long-term wealth and earn compounded interest.

Here are a few points to bear in mind while considering investment options as a college student:

Have a “Why”

Investing is mostly for the long term and not the short term. Having a why means having a motive for investing. Having a reason for investing makes it easier to stick it out to the long term irrespective of rising and falling in the market. Your Why can be anything ranging from building long-term wealth to gaining financial independence. So think about your finances in the long term when making an investment decision.

Start

No protocols, start by simply spending a few hours, a day learning the basics. This is a good way to start. It always helps to do the necessary research before jumping into the market. A great way to kick start can include; looking up sites Investopedia, nerdwallet, watching YouTube videos on this topic, understanding how to read stock charts, signing up on investment apps like Robinhood, betterment, wealthbase, stockpile, invstr, and more. There are a ton of these apps that exist. 

Have an investment strategy

Before figuring out a strategy, brainstorm your financial situation and what you aim to achieve after college. Whatever strategy you decide to adopt needs to fit into your financial plan, risk tolerance, and access to capital and schedule. These strategies need not be rigid because risk tolerance levels change with time. You may decide to adopt a passive strategy that involves buying and holding stocks (these most times are less risky) while an active strategy involves frequently buying and selling. Other investment approaches to adopt can be based on income, value, growth, and market index. 

Be aware that the market fluctuates.

Markets can swing way up or down below. Knowing that these price fluctuations are normal is a great way to grow confidence in the process. A good financial plan foresees this and combines various investment types that help to cushion any negative blows that may arise from market volatility. It can be difficult to stick it out when the market is falling but if you exit before the market rebounds, you will likely lose more.

If you decide to go Fractional

As a student, it may be difficult to afford to buy a share in large companies like Amazon and Google because they have super expensive shares. However, buying these shares in fractional portions make it a possibility to own shares in large companies. This is like slicing a cake into smaller bite-able pieces. With fractional investing, you will no longer need a chunky amount of money to start investing. With little amounts, you would gain investment exposure and would still get paid dividends. You would equally be able to diversify with less money. For instance, with just $100 you can get 10 different shares. However, before going ahead with the fractional investment be sure about the minimum buying and the range of stocks that permits you to do fractional investing. 

Finally, the stock market is not a place to put the money you will need in a few years. There is usually too much uncertainty in the stock prices in the short term. For instance, at the beginning of the Covid pandemic, the market plunge plummeted by more than 30% but still recovered afterward.  

Today, it is easier than ever to invest as many brokerages have gotten rid of a lot of trading fees on individual stocks. This means you don’t need a lot of money to get started. 

It’s never too early because the earlier you begin, the more time your money has to build up.