Outside shot of the iconic New York Stock Exchange building. Photo provided from Unsplash by @Mitchnielsen, Mitch Nielsen.
By Jonathan Ghattas, Staff Reporter
As a full-time college student, I have my fair share of responsibilities, as we all do. With a car payment every month, along with rent, groceries, and other monthly expenses, the idea of saving money seems impossible. For students like us, our focus generally tends to be on getting assignments done and graduating, but learning to save and invest your money is as important to your future.
Through “the grind”, the ability to set aside some extra cash and build a savings account is doable, and as someone who works two jobs to stay afloat, I can tell you that this goal is achievable.
One of these ways would be to open up a brokerage account and invest into stocks. This can be done fairly easily through the use of various trading applications, such as TD Ameritrade and Robinhood. Personally, I’ve found using TD Ameritrade as the better option, due to the functionality and logistics of their application.
I’ve always held an interest in the stock market, but never found myself investing and instead would set my money aside in a savings account. Though, over time as I began to save more I noticed that the bank’s interest rate was yielding nothing more than a few mere pennies every month.
This prompted me to look into other ways in which I could have my money be protected yet be able to provide me with growth in the long term.
The stock market was the answer, and so my research began.
As a first time investor, there are several things that one must learn and digest. Here are two tips that can help in setting up a long-term successful portfolio.
Tip #1: Patience.
Yes, before anything else being patient is the number one rule when it comes to long-term investing. This is a trait that must be learned and instilled into an investor from the moment you make that very first stock purchase. Without patience, all other fundamentals fall to the wayside if one is not able to keep a level head.
Being patient is key due to the volatile nature of the stock market, as at times you may face down stretches that will truly test your fortitude.
Having a long term view is critical in order to be a successful investor. As one of the most successful investors in history, Warren Buffett made his fortune by playing the long game.
In an interview with CNBC, Buffett shared some tips for first time investors.
“I know what the markets are going to do over a long period of time,” Buffet said. “They’re going to go up. But in terms of what’s going to happen in a day, or a week, or a month, or a year even, I’ve never felt that I knew it and I’ve never felt that was important.”
Reminding oneself that the goal of investments are long-term is one that must be done daily, and while at times an individual may feel tempted to take profits, this daily reminder will always be the single best piece of advice.
Tip #2: Diversity.
Having diversity in what stocks an individual decides to own is also important when building a portfolio. Additionally, deciding the amount of money to invest compared to the amount to leave in a savings account is also important.
Essentially, it is best to only invest a certain percentage of savings, this way there is less exposure to the market and a majority of the nest-egg is still intact. By doing this, an individual has already diversified their money and can invest freely.
Now when it comes to being diverse in the type of stocks owned, investing in multiple companies that cover the various sectors that make up the economy is a move to consider. While it may be wise to put all the money in the technology sector and purchase stocks such as Apple or Microsoft, it can inherently limit gains. By keeping your investments diverse, and adding other sectors such as energy, healthcare, and financials can help limit your exposure to losses.
I understand it may be difficult to set aside money during uncertain times, but I myself started investing when the pandemic began. The uncertainty of the virus forced a huge sell off in the market, which created the perfect buying opportunity for a long-term investor. It’s during these moments that one must look to the market and seek the best stock to smartly invest their money for the long-term.