Oct 23, 2019
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What are Some Good Long-Term Investments for College Students?

I recently came into a windfall of money, and I want to be smart about how I use it. Some of it will go into savings, but I’d like to invest the rest of it. I like the idea of getting a head start on saving for retirement while I’m in college. What are some long-term investments that are good for college students?

It’s great to hear that so many college students are interested in investing. If you start investing now, your future self will thank you.

It’s important to remember that long-term investments are just that: long-term. You’re going to have to prepare yourself, mentally, to ride out the ups and downs that you’ll inevitably face with your investments.

Stocks are usually the go-to long-term investment, and that’s because they offer a lot of advantages.

  • Because they’re paper investments, you don’t have to worry about managing a property or business.
  • Stocks generally rise in value over the long-term, and in many cases, the value increases spectacularly.
  • Many stocks pay out dividends, which provides you with steady income.
  • Investments can be spread across multiple companies and industries to better protect against volatility.

When investing in stocks, you might consider growth and high-dividend stocks. With high-dividend stocks, the yields are usually higher than with fixed-income investments. Take your time and do your research before investing in stocks, especially if you plan on using an online trading platform.

In addition to stocks, you might also consider long-term bonds. These are interest-bearing securities that have terms greater than 10 years – usually 20-30 years. The primary drawback with long-term bonds is that you’re locked in to a specific rate for a very long period of time, and in all likelihood, interest rates will rise during that period.

Many experts recommend starting with a balanced portfolio of 60% stocks and 40% bonds. The bonds protect against risk, while the stocks allow for long-term gains.

Another option is to invest in mutual funds and exchange traded funds (ETFs). Technically, these aren’t investments themselves, but rather, they serve as portfolios of different stocks and bonds. They can be professionally managed, or they can track popular market indexes.

Eventually, if you want to diversify your portfolio, you can think about real estate. You don’t necessarily need to purchase physical property if you want to get into the real estate industry.

REITs, or real estate investment trusts, allow you to invest in real estate without the complication of owning and managing property. The advantage of REITs is that you can invest in them the same way you invest in stocks. When you buy into the trust, you enjoy part of the ownership and profits of the underlying real estate assets.

An REIT functions similarly to a high dividend paying stock. At least 90% of their income must be returned to investors via dividends. For this reason, REITs are one of the highest-yielding investments out there.

You have a lot of options when it comes to long-term investments, so weigh them carefully. Take your time, and enjoy the process.

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