Investing for Students
As college students, you might wonder why you should consider investing. However, as students you have something most investors later in life wish they had: time. Thanks to the wonders of compound interest, a relatively small investment today can result in a very large reward in the future.
Investing in stocks is one of the best ways to build wealth over the long run. Holding shares of stock in a quality company for a long time is one of the best ways to build wealth.
One of the hardest things to do as an investor, however, is to find and buy quality stocks. For most people, when trying to get above average returns on their money (or, beat the market), they often end up getting below average returns, buy "penny stocks" (stocks under $5), or buy the latest hot tip they hear. So how does a person take care of that problem? Buy the market they are trying to beat!
Exchange traded funds, or ETFs, are in a very basic sense, a mutual fund that you can buy or sell in the stock market. They often have lower annual fees then mutual funds, are easier to buy, and usually track the major indices (the Dow, S&P500, or the Nasdaq) better than mutual funds that claim the same thing. ETFs pool investor's money and buy a wide array of stocks that helps lower risk and allow for easy diversification.
Below is a table of popular ETFs that are available and what they try to imitate.
| ETF Name | Symbol | What it tracks | |
| DIAMONDS Trust | DIA | Track the Dow Jones Industrial Average (commonly known as "the Dow.") | |
| NASDAQ 100 Trust | QQQQ | Tracks the largest 100 non-financial companies in the Nasdaq Composite | |
| SPDRs | SPY | Tracks the S&P 500 index |
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Note: These are not recommendations, this list only mentions the more popular ETFs available today
Look around at different financial websites to get more information about stocks, mutual funds, and ETFs. Four sites we recommend are Motley Fool, Yahoo Finance, Google Finance, and SeekingAlpha.com. The Motley Fool focuses on investor education, so its a good place to start out. Yahoo and Google Finance are sources of immense financial information to use with the knowledge gained from the Motley Fool. SeekingAlpha is an aggregation of many financial bloggers who are very smart, but talk over most people's heads. However, it is still a good source for investing ideas.
Even if you don't have money to invest now, its a good idea to start learning about stocks and such now so you'll know what to look for when you do have money. Also, you might want to consider getting practice by playing a fantasy stock game, either online, or just writing down stocks you would invest in if you could and track the stocks' performances.
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