Among the biggest adjustments college students have after high school are moving away from their homes, finding new acquaintances, and arriving at class on time. It's amazing that this new generation of teens has time for anything at all, much less investing, given everything that they have to deal with. Surprisingly, though, one of the greatest times to begin investing is when you're in college.

Even individuals with fewer funds may start building a collection of investments, and it might even work to your benefit as you won't have to worry about losing a significant amount of money while developing your ability to invest and cope with some unavoidable losses.

7 Best Ways to Invest While Youre in College

Here are some of the best ways to invest while you're in college.

1. Create a Roth IRA.

If you have an additional source of income while attending schoola side hustle or a part-time job on campus, for instanceyou can open a Roth IRA. A Roth IRA is a retirement account. While in college, it may not look like much, but there are several advantages to establishing a Roth IRA:

Tax-free growth: Your money will grow over years and you won't have to pay taxes on it unless you decide to take money out early.

Retirement income that is tax-free: Funding for investments into a Roth IRA comes from post-tax earnings, which are the residual portion of your pay after your employment deducts taxes and other expenses. When you are prepared to retire, you can withdraw money tax-free if you're fifty-nine and beyond.

Contribution access: In general, accessing the funds in the retirement savings account requires you to be a certain age. If not, there will be heavy penalties imposed. On the other hand, you may withdraw the funds you put into a Roth IRA without paying penalties; but, you won't be able to collect the refunds until you're sixty-nine years old.

2. Create an Account for Taxable Brokerage

A taxable trading account is an additional alternative for college students in case they choose not to create a Roth IRA or any other type of retirement account. These accounts don't offer tax advantages as retirement accounts do, but you may take money from them whenever you want without incurring penalties. They're a wise option if you'd prefer to invest for immediate needs, like a house or vehicle purchase, than for retirement. You may create a taxable account with an investment brokerage company or an account with investing applications such as Wealthbase, Acorns, and Robinhood, much as with IRAs.

3. A type of Certificate of Accumulation (CD) Account

If you are looking for less risk than putting your money into the stock market but a better rate of returns than a savings account, a certificate of deposit (CD) can be a viable option. When you invest in a CD, you set aside a certain amount of money for a predetermined amount of timesay, 18 months. During the duration of the CD, you are not allowed to access the funds in the account without incurring penalties on your gains. Still, if you play by the rules of the game, a CD may yield a larger annual percentage yield than a savings account. CDs are available from many financial institutions, such as credit unions, but you may also open one online.

4. Reduce Debt

Paying off debt in school could be one of the finest investments you can make, even if you may not think of it as investing when thinking about how to invest in college. Paying down credit card debt with a high-interest rate or school loans might result in more savings than investing the money in other financial ventures.

5. Play with your Brokerage Account that is Taxed

The tax advantages of retirement accounts outweigh those of regular brokerage accounts. However, since you may invest in a wider range of assets without contribution caps, they might provide greater flexibility. Plus, depositing a small sum of money into an ordinary savings account allows you to trade stocks even as a college student if you're still interested in doing so rather than just saving for the future. Simply said, never exchange money you can't afford to lose.

5. Register with a Robo-advisor

If you're still not ready to commit to index funds or specific stocks, you may use a robo-advisor. A robo-advisor invests in a variety of funds based on your preferred level of aggressiveness and investment period horizon, automatically constructing a package of assets for you. Novice investors can begin with as low as $20 and can progressively expand their capital without paying extra transaction costs.

While some robo-advisors offer no fees for small accounts, most charge a percentage of your assets, usually 0.25 percent annually, for their services. Wealthfront and Betterment are two of the larger robo-advisors in this kind of investment. You won't often be required to pay the counsellor any additional fees, even if the fees for any funds they invest in are typically based on the quantity you own. In addition, the consultant will often offer you other benefits, such low bank account interest rates and typically no lock-in periods.

7. Take a Look at a High-yield Certificate of Deposit (CD)

Investing involves more than simply trading stocks and bonds; you also need to have a sizeable cash reserve to get you through difficult times. Short-term (less than five years) cash needs should be stored in a secure location, such as a savings account with a high yield, a bank certificate of deposit (CD), or Q.ai's Cash Reserve.

The Bottom Line!

For college students considering investing, the most crucial advice is also the most pressing: act quickly. Planning for the future of your money may start as soon as you start learning about the market. Starting with small sums of money, students should be able to expand their portfolio and expertise.

Remember that when you are first starting out, it makes sense to take a methodical approach. Investing heavily in a stock or specific asset class carries a high level of risk and can result in significant losses should the market drop. Most investments include some level of volatility, and part of gaining knowledge is understanding how to manage the feelings it causes.