Often as I write here, I realize that everyone is at different stages in their investing journey. Some are far ahead of me, while others are just starting out. However, the main focus of this blog remains on being a broke college student, a demographic I belong to—though perhaps not broke in the traditional sense.
Today, I want to share some investing wisdom for students who are looking to invest what they have. It’s important to note that this isn’t advice to recommend specific ETFs, stocks, or financial investments – always do your own due diligence and consult with a legitimate financial advisor.
With that out the way here is some foundational wisdom I’ve gathered along the way.
My first tip is to steer clear of hot stocks. Many young investors are drawn to these trendy meme stocks or the latest cryptocurrency craze, only to end up losing what little money they had to begin with. If a stock or crypto coin is being heavily hyped on social media and everyone seems to be jumping on the bandwagon, it’s usually a major red flag to stay away.
Take for example the bitcoin hype. When it was surging, everyone from YouTube influencers to celebrities was promoting it, sacrificing their integrity just to push people to buy in. This kind of hype is usually built on speculation rather than solid fundamentals. The danger of investing in such hot stocks or crypto coins is that by the time they’re heavily promoted and hyped, they’ve often already peaked.
Those who jump in late often end up holding the bag when the trend reverses. As legendary investor Peter Lynch suggests, true opportunities often lie where there’s little institutional ownership and minimal hype. When there’s less noise surrounding an investment, it usually means it hasn’t been artificially inflated by news and speculation. That’s where the real potential lies, provided the fundamentals are strong.
Another crucial tip is to set aside your ego and understand your own temperament. Ask yourself if you can withstand losses during market downturns. Do you have the time and patience to thoroughly research stocks?
Can you make decisions without letting emotions cloud your judgment? Avoid getting caught up in the notion of being an investor or chasing get-rich-quick schemes. The quickest path to losing money is not understanding your own temperament and letting ego dictate your decisions
Another tip is to avoid getting overly excited about your portfolio. Investing is more like watching paint dry—it should be steady and not driven by emotions. Wealth is typically built slowly over time, and only a few people manage to strike it rich with a single investment. Take the GameStop craze, for instance; while some profited greatly, many others lost money. It’s important to remember that exceptions to the rule do exist.
Now that we’ve covered some common misconceptions beginner investors often have, let’s delve into the basics. It’s crucial to only invest money you can afford to lose. If you’re a broke college student struggling to make ends meet, don’t feel pressured to invest more than you can spare.
You can start with as little as a dollar through brokerages like Robinhood, which introduced fractional shares, making investing more accessible. Fidelity and Charles Schwab also offer fractional shares, with Schwab requiring a minimum $5 investment per fractional share of select companies from the top 1500 in the US, like Coca-Cola, Target, Walmart, and Hershey. Fidelity allows starting with just $1.
I began with Robinhood before transitioning to Charles Schwab as my portfolio grew. It’s important not to be snobbish about brokerages; everyone has to start somewhere.
When starting out, consider investing in simple ETFs like Vanguard’s VOO. This isn’t a specific recommendation—do your own research—but ETFs can offer diversification. Holding individual stocks can leave you vulnerable to downturns if a company faces challenges or if an entire industry struggles.
Diversification helps mitigate risk by spreading investments across different sectors, so losses in one area may be balanced out by gains in others.
If owning individual stocks appeals to you, that’s perfectly fine—I myself find them valuable. However, I also balance my portfolio with ETFs to manage the risk associated with individual companies. Many investors, like myself, adopt a hybrid approach that suits their preferences and risk tolerance.
It’s crucial to understand different investing styles or methods. There are value investors, inspired by principles like those of Benjamin Graham., There are investors influenced by the principles of John Bogle, the father of ETFs, known as Bogleheads.
Some investors don’t follow a certain approach and will systematically invest regardless of market conditions, buying shares at both high and low prices over time to average out costs whether it’s ETF’s or individual stocks.
Here I am going add the worst way to ‘invest’ is to try and time the market. If the market was that predictable we would all be rich by now.
It’s important to recognize that investing isn’t akin to gambling at a casino or a scam. It involves real money flowing in and out of portfolios daily, whether in retirement accounts, pensions, Roth IRAs, taxable brokerage accounts, and more. The stock market cares solely about money, and respecting your money means conducting thorough research, investing only what you can afford to lose, and making rational decisions without succumbing to emotions or media influence.
If you respect the market you will be rewarded but if you play it and you’re not careful it won’t hesitate to make a fool out of you.
The Broke College Student 
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