As an undergraduate, you need to juggle studies, social life, and perhaps a side hustle or part-time job, and may not have much time to consider investing. Yet, the earlier you start investing, even with small amounts, the faster your portfolio will compound.
For students, starting young offers not just a path to grow your wealth, but to learn practical skills, too. Learning to manage risk, analyse markets and make informed decisions builds a strong foundation for the future, whether in business or personal finance.
In short, investing isn’t just about money – it’s about acquiring a mindset that emphasises patience, growth and informed decision-making.
Read Also: Anyone Can Be An Investor: What Type Of Everyday Investor Are You?
You Don’t Need A Fortune To Start Investing
A common misconception is that you need a significant amount of money to start investing. This just isn’t true.
Platforms like robo-advisors allow for diversification even with small investments, enabling students to start portfolios with as little as $50 or $100. You can also start regular investment plans with local brokerages to buy ETFs and blue-chip stocks with just a modest monthly contribution.
Today, many brokerages like Tiger Brokers also offer fractional investing. You don’t have to buy a full Tesla stock for nearly US$300 – and instead can start investing from $1 to own a fraction of the stock. This can enable students who have more conviction on stocks and have done their research to enter positions on individual stocks with minimal funds.
Doing this, students to develop a habit of investing, while not having to worry about hefty initial costs and investment size. Consistent, small investments can help you steadily build a significant investment portfolio over time, helping you gain confidence and experience.
With local brokerages, like Tiger Brokers, student investors can open their brokerage account from the time they turn 18.
The Power Of Compound Interest On Both Your Investment Portfolio And Knowledge
Whether Albert Einstein really called compound interest the “eighth wonder of the world” may be debatable. What is not is that the quote rings true.
Simply put, compounding allows you to earn returns on both your initial investment and the interest it generates over time. The earlier you start, the more time compound interest has to work its magic. For example, if you invest $1,000 today and it grows at an average annual return of 7%, you will have $1,070 the following year.
In the year after that you will earn 7% on your initial $1,000 investment – giving you another $1,070 – as well as 7% on the $70 in interest you earned in the first year – giving you $4.90 extra. You will have $1,144.90.
In 40 years, compounding at 7% p.a., your $1,000 will grow to nearly $15,000.
This exponential growth means that even if you’re only able to invest a little each month, those contributions will grow significantly. For students, who have long-term horizons, compounding can be one of the most powerful tools for wealth accumulation, turning even modest amounts into sizeable sums by the time you retire.
Read Also: Guide To All The Fees You Pay When Investing In Stocks – And How To Reduce Them
Young Investors Can Afford to Take More Risks
One of the most significant advantages for young investors is the amount of time they have in the market.
With the ability to ride out market downturns and leverage on upcycles, younger investors can afford to invest in higher-risk assets like stocks. In contrast, the older you get, the more you will prioritise portfolio stability as you may not have sufficient time for the market to recover from a downturn, before you retire and need to start drawing down your portfolio.
As students, you also benefit from compounding your experience – experimenting with different strategies and learning from any mistakes while you’re are relatively young and financially unburdened.
A few losses, even though still painful, may not have a huge impact on your overall financial well-being. For a start, it’s because you’re likely to have only invested a smaller amount. But , it’s also because of the resilience and insights that you gain will be invaluable when making larger investment decisions later on.
Opening A Potential Career Path
In today’s job market, and especially as Singapore is a banking and finance hub, employers highly value candidates with financial literacy.
Skills in managing money, assessing risks, and making strategic financial decisions are valuable in almost any industry. Especially for business and finance students, a basic understanding of investing can make them more attractive candidates for roles in banking, consulting, and financial planning. Even for those who are in other fields of study, gaining financial literacy can set them apart from their peers.
Furthermore, demonstrating a proactive interest in personal finance reflects well on your personal brand. It suggests a level of responsibility, foresight, and ambition – all which are attractive qualities to potential employers. By investing while in university, students can develop skills and experiences that add value to their resumes and increase their career competitiveness.
Developing A Habit To Make Investments
Investing from a young age instills a sense of financial discipline, teaching students to manage their finances thoughtfully and effectively. When you start investing, you become more conscious of your spending and saving habits. Rather than living paycheck to paycheck, you’ll learn to set aside money with meaningful future goals in mind.
Building this habit of budgeting, saving and investing early creates a positive starting point – going into adulthood.
It’s about prioritising long-term gains over immediate pleasures, fostering a disciplined approach to money that will benefit you long after graduation. Moreover, seeing the impact of consistent saving and investing is highly motivating, encouraging students to stick with these habits even as they begin their careers.
Join The Movement As A #EveryDayInvestor
Just like the younger investors we’ve spoken to, including Gavin and Ye Kai in our #TheEverydayInvestor column, other undergraduates can start to build a positive difference for your finances at and early age too.
For those interested in diving deeper into the world of investing, DollarsAndSense is launching our first #EveryDayInvestor event – offering a unique opportunity to learn and grow as an investor. Hosted at the SGX Centre on November 13, 2024, from 6.30 to 8.30 pm, this event is tailored for anyone keen to start their investment journey, regardless of financial background.
If you’d like to hear from experienced investors like Thomas Chua and social media finfluencers Aaron and Sara Wee from The Weeblings, who have set a goal to build a $1 million portfolio, the event promises insights into practical investing and wealth-building for everyday individuals.
It also presents an ideal opportunity for students to network, learn from seasoned investors, and gain confidence in managing their financial futures.
Registration is free, and will close once the maximum number of attendees is reached.
Read Also: Why There Is An #EveryDayInvestor In Each Of Us
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