Investing for College Students

By Brenda on October 6th, 2011


Simply going to college is an investment in your future. A college degree can add millions to your earning potential. A study done by the Department of Labor showed that a person with a high school diploma will earn approximately $1 million dollars over their lifetime.

That may seem like a lot of money, but it only equates to about $24,000 a year. Now consider that a person with a bachelor’s degree earns about $2.3 million dollars and you can see why it is a good idea to go to college. Just four more years of education is worth over $1 million dollars!

But what about investing your money while you are in college? Sure, most college students do not have a lot of extra cash, but they can still earn a good return on their money and develop sound investing skills. Let’s look at some basic investment and savings strategies you can implement now – even without a lot of money.

Free Checking Account

You should never have to pay a monthly fee for a checking account with all of the options out there. It’s ludicrous that you have to pay to have a bank hold on to YOUR money! If they charge a fee tell them to waive it or you are going to walk. There are plenty of banks out there that do not charge checking account fees.

Savings Account with Interest

You’re not going to get rich parking your money in a savings account, but you might as well have one that has a decent interest rate. Most savings accounts have an interest rate of .3-.5%. Check around on the internet and you can find a savings account with no fees, no minimum balance, and a 1% interest rate. At least it will help you ward off inflation a little bit.

Money Market Account

Money market accounts are great because they have high yields. Some money markets have yields as high as 5%. You can also make withdrawals from them without penalties, which is a great feature in case you get into an emergency situation where you need cash. Most only allow certain amount per month so be aware of that number. An be careful to not use it as a checking account and drain all the money.

CD Accounts

CD’s have rates that can keep you from getting bit by the inflation bug. They may have rates as high as 3%. CD’s usually require an amount above $1,000. Once you invest the money you cannot withdraw it without severe penalty. Short-term CDs range from 1-120 months. The longer the time period the higher the interest rate in most cases.

Employer Retirement Account

If you are working full-time you should check to see if your employer has a retirement plan that matches funds. That means that for every dollar you invest they invest a dollar into your fund as well. You instantly double your money! It’s like free money! You can’t beat that deal. Matching funds range from $.50 for every dollar to $1.




Category: Other and General