Investing Basics for Beginners: How to Invest as a Student

As a student, saving money is a top priority. On top of tuition, books, and living expenses, most students find themselves in debt by the time they graduate post-secondary. Scholarships can help you avoid this short-term reality. However, if you want to set yourself up for even more in the future, investing can help you save for those big goals in life—like buying a house or starting a business. Here’s our guide on how to invest as a student. 

What is investing?

You’ve likely heard of investing—but often its definitions are wrapped in financial jargon that doesn’t quite make sense. In simple terms, investing is giving your money to a company, government, or other entity in the hope they provide you with more money in the future. 

Investing is different from saving or trading. When you invest, you’re typically putting money away for a long period of time rather than trading stocks regularly or withdrawing money from a savings account. Investing can also come with some risk. While money put into savings is usually guaranteed, money put into investments is not. However, you can often get a lot more out of investing than from savings. Check out this graphic from Wealthsimple for example.

A graph shows the difference between saving and investing as a student. It compares a scenario of how much more money one can receive by investing instead of saving.

Before You Invest

Before you learn how to invest as a student, you first want to consider your current financial situation.

Do you have a lot of student debt? If so, investing may not be the right step right now. Start by working to pay off your debt before you take the leap. You also want to think about emergency funds. Do you have extra money in savings right now for any unforeseen circumstances like a job loss or illness? If not, you may want to accumulate an emergency fund before investing all your savings. 

What to Invest In

Next in how to invest as a student is learning what to invest in. There are a few different kinds of investments you can make! Here’s an overview of the most common:

  • Bonds— a loan with interest, often issued by governments
  • Stocks— a tiny piece of a company that anyone can buy
  • Real Estate— property such as apartments or houses
  • Automated Investments— a hands-free approach that allows you to invest in a broad section of the market

You want to avoid investing all your money in only one kind of investment, or  “putting all your eggs in one basket”. It’s best to have a diverse portfolio of investments to ensure you don’t end up losing out on money.

How to Invest as a Student

The sooner you start investing, the better. This is because money in your savings account may lose value over time due to inflation. Check out the Wealthsimple graphic below for an example of inflation. Investing your money allows it to grow over time and not shrink due to inflation. 

A graph displays why inflations makings learning how to invest as a student important. It shows how the same money that buys you 30 burgers today will buy you only 23 burgers in 10 years.

As a student, chances are you’re not sitting on a great pile of savings. However, you can still start investing! 

You can start with small amounts of money. A spare change app is a great way to do this! These services round-up your purchases, allowing you to invest small amounts of money that you’d hardly miss. For example, if you spent $3.39 on a coffee then $0.61 would be invested.

Others ways to start investing can be to:

  • Set up small, monthly transfers from your checking account
  • Immediately invest any tax returns
  • Invest any raises instead of altering your lifestyle
  • Ask relatives for investing money, rather than other gifts

There are many ways to invest. However, the easiest way is to use an online platform. 

At GrantMe, we’ve partnered with Wealthsimple to help you start investing as a student! 

Wealthsimple provides a personalized investment profile with low fees, expert advice, and high security to allow anyone to invest like a pro. Plus, you can get a $50 bonus when you open and fund your first Wealthsimple Invest account through our partnership!

Learn more about Wealthsimple and start investing here!

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