With lots of things college students need to deal with, getting into stocks might be light years away from their mind.
However, we believe that the hectic part of a student’s life is all in the mind. Someone who has a real drive to learn something to have a better experience will not entertain any excuses.
Enter Stock Trading. We know this might be an alien term for students, and they might even think that it’s only exclusive for the guys in business suits. But stock trading is a real opportunity for students to learn how to grow their money. It’s an opportunity to learn and a chance to grow.
Stocks represent fractional ownership in a company, and the stock market is where investors buy and sell the ownership of their shares.
And before getting your feet wet in the stock market, here are the essential points you need to know before going on a total dive.
Why before How
Life is not always about having the right answers to all your questions. Sometimes, you’ve got to start somewhere else. In the case of a stocks venture, instead of asking how to start with it, first, you need to ask yourself why you will do it. You must realize that there must be a sense of purpose when doing a specific thing — a meaningful purpose.
Being anchored in a significant purpose will keep you firm from numerous waves of problems. Being a student and a venture in stocks might not be a great combination, but purpose cancels any excuses.
A student with a lousy purpose on investing in stocks will surely throw it away in a few months, thanks in part to academic demands. But get this, the one with a definite purpose, will not just survive but thrive both with his/her academics and trade ventures.
Knowledge is King
Your classmates might be investing in frappes every day, and the worst thing you can do is to do the same. Realize the importance of investing your money on things that can add up to your knowledge. Knowledge, both on your subjects and investing.
Imagine how thrilling it is to shoot up on two things while you’re in college, gaining knowledge in two areas. This will lead us to what we’ve tackled in the number point, which is having a sense of purpose. Providing yourself with knowledge, both on your subjects and stock venture might sound too overwhelming — but not if you have a sense of purpose.
Investor Psychology Alert
Investor psychology shows us the usual response of investors when investing. It is their fear of missing out on other investors’ returns. As a result, they tend to make investment blunders such as buying high and selling low and other short term gain investments.
We’ve talked about the importance of equipping yourself with knowledge in the second point. Invest in books about ‘investment psychology’ to go in-depth on this topic. Believe us, the time and money you will invest in studying this area will surely pay off in the future. It will enable you to avoid the usual big-time mistakes some investors make, and thus, will save you from losses and lead you to higher returns. This is ROI at its finest.
Plan a Realistic Investment Strategy that Falls in Your Schedule
One thing that you should always remember is you’re still a student and not yet a full-time investor. So your investment plans and strategies must adjust to your school schedule and activities. There’s a risk that you will be caught up with the entanglements of investing that you’ll put your academics as a second priority.
Having a detailed investment analysis will show you a bigger, more accurate picture of what’s happening in the market. But this step requires in-depth research that will demand a lot of your time, and will inevitably compromise your academics. But given your student status, there is a perfect alternative that you can do to keep your stock venture going.
You may regularly invest in a portfolio of diversified investment funds that may consist of mutual funds, index funds, and exchange-rate funds. This can be advantageous for you because you can delegate the complexities of your venture by investing in a third party.
Form Your Circle
The best way to find like-minded people is to make it known what you’re passionate about. Aside from books, blogs, and other resources, there is so much to learn from other people. You won’t know how much they can help you until you meet them. Also, sharing your experiences, both the good and the bad, is a fulfilling task as a student. Never form a circle with the sole purpose of just benefiting from it. Right from the very start, you must figure out how you can add value to them. The universe will surely return the favor.
So these are the most important things you should note when you’re planning to test the stock waters while you’re still in school! Claim that it will be a great journey ahead. Kudos in advance!
Also read: Differences Between Forex and Stocks