Written by: Cole T. Fuerth, AVP Finance
Money! I am just going to start every article I author this way. Investing is an important part of the world of finance, yet many students including me at one point, know almost nothing about. It is hard to pass up on the idea of your money growing while you sleep, “working for you” some would say but many are discouraged by the slow growth of their portfolios or simply don’t know where to start. In this article I will list some general investing tips as well as an overview of how you can get involved in the investing world. For the purposes of this article, I will only be discussing standard methods of investing which are most accessible to students. I would also like to preface the article by saying that investing may not be the best option for every student. Each and every student will have their own unique relationship with money, and it is important to understand what you are and aren’t comfortable with.
If I could leave you all with only one piece of advice, one take away, it would be to get started. Even if you aren’t interested in investing now or don’t feel you’re in a financial position to invest I still suggest you get started, no matter how small, in order to learn the basics and get comfortable with the idea of investing for the future.
If you have a bank account, you’re already ahead of the game. The vast majority of financial institutions have many methods for students to invest and also have many resources for financial planning. Each bank has their own way for you to invest, the two methods I wish to speak on are their online investing portals and their financial planners. I recommend to any students looking to invest to visit a branch of their bank and talk to a professional rather than university students. I encourage you not to be shy in simply going up to the counter and asking to book a meeting with a financial planner.
Below are links to some of the largest Canadian banks’ investment portals or articles on how to get started investing with them:
TYPES OF INVESTMENTS
The following is an excerpt from BMO’s Investing 101 website page linked above. I don’t want to reinvent the wheel here:
“Stocks: Stocks are easily tradeable units of ownership in a publicly traded company. Get access to stock trading on the major North American exchanges, including the Toronto Stock Exchange (TSX), the New York Stock Exchange (NYSE) and NASDAQ. Stocks are easily tradeable units of ownership in a publicly traded company. Get access to stock trading on the major North American exchanges, including the Toronto Stock Exchange TSX, the New York Stock Exchange NYSE and NASDAQ.
ETFs: Exchange traded funds (ETFs) are a combination of equities, fixed income and other assets. They can be traded just like stocks and come with typically low management fees. We offer a selection of Exchange traded funds are a combination of equities, fixed income and other assets. They can be traded just like stocks and come with typically low management fees. We offer a selection of ETFs, commission free.
Mutual Funds: A mutual fund pools your money with other investors to buy a portfolio of investments overseen by a portfolio manager. They are easy to purchase with low investment amounts.
GICs: A guaranteed investment certificate (GIC) is a secure investment that guarantee 100% of your principal, meaning your initial investment is safe, no matter what the market does.A guaranteed investment certificate G I C is a secure investment that guarantee 100% of your principal, meaning your initial investment is safe, no matter what the market does.
Bonds: Bonds are fixed-income contracts that function like loan agreements between investors and borrowers.”
BASIC INVESTING TIPS
Start Early: I said it before, I will say it again I suggest every student start investing early no matter how small the investment budget. The general principle of investing is that the sooner you start the more time your money has to grow.
Set Clear Goals: Having clear investment goals will help you shape an investment strategy. Know when you want to spend your money and on what is an equally important component of investing. Investing is a means to and end and knowing to what end is important.
Create a Budget: Like I mentioned before, investing may not be an option for some students given their budget. It is important to create a budget if you do wish to invest so you are able to find the appropriate amount to invest without sacrificing the many essential expenses incurred by students.
Seek Professional Advice: Like I mentioned earlier, seek professional advice. Visit your bank or event do some research online about financial advisors in your area. Often times meeting with them for the first-time costs you nothing but time. They will be best suited to guide you.
Stay Patient and Persistent: Investing requires patience and discipline. Be patient, and understand what you are comfortable with when picking what to invest in. The market will go through many ups and downs while you invest, and it is important to stay within your comfort zone and be persistent.
Educate Yourself: Like you are doing now, take the time to learn about investing. Get a better grasp on how to invest and what the best investment strategy is for your needs. Ask questions and get as comfortable as you can with investing concepts relevant to you. It is important to understand risk and potential rewards associated with investments.
Diversify: Don’t put all your eggs in one basket. Not a foreign concept. There are many things to invest in and each carry their own risks. Spreading out your investments and subsequently your risks is one way to reduce the odds of a significant loss.
Monitor and Review: Have a look at your investments from time to time. Make sure your investments align with your goals and risk tolerance. You can always adjust your investment portfolio as needed.
Like I mentioned earlier, If I could leave you with just one piece of advice it would just be to start. No matter how small the investing budget, I believe every student should get some experience with investing. Although it may not seem important now, investing is path for many to be able to afford large purchases like a car, a wedding, a house, and I would argue what is most notable, retirement. Learning about investing now will act as an important step for improving your financial health as you grow older and enter the workforce. I would also like to say that I am by no means an investing professional, but you do have access to investing professionals to guide you better than I ever could through your bank or even through the websites of trusted financial institutions.
[Disclaimer: SSSC is not providing financial advice. The information presented is for informational purposes only and should not be construed as financial guidance. Users are encouraged to seek professional financial advice tailored to their specific circumstances before making any financial decisions]