Is stock market good for students? In the past 6 months, we got 50+ emails about this question, and it is obvious to ask this question as a student because every student wants compounded financial results after a certain period.
In this blog, we explained how the share market is good for students and how you can begin your investment journey.
Table of Contents
So let’s begin with a basic question.
What is the Stock Market?
In simple words, the stock market is a place where people buy and sell stocks of companies. This transaction was done via the D-mat account of the shareholder.
In other words, assume a company is a large pizza, and the pizza is divided into lots of small slices. Now you’ve purchased 1 slice or 1 stock. Now if the value of pizza increases by putting in some additional effort, then the additional value is your profit. In terms of a company, if you purchase 1 stock of a company and the value of that company increases by your efforts and strategies, then the additional value is considered a profit.
Which student can invest in the stock market?
There is no limitation to investing in stocks, be it as a minor or adult, but a student must be 18 years old; then only they would be treated as a regular investor.
Is Stock Market good for students?
Overall, we can say that the stock market is good for students because it helps them understand how a business in a particular sector works, how they manage their operations and finances, in which situations it is better to take loans, and at what percentages.
Here, do not confuse yourself with trading and long-term investment. Here, we’re considering the stock market as a long-term investment.
If you want small results in the short run, then trading can be a good option for you.
How can students invest in stock markets?
These are some valuable points to be noted before you begin your investment journey as a student.
First, educate, then invest: Once Warren Buffett said “The best education you can get is investing in yourself”. It means you have to educate yourself financially, and for this, you have to read books like “The Intelligent Investor” apart from your school or college books.
Invest at least 30 minutes daily and prepare notes for every chapter and key learning from that book, revising them consciously.
Listening to business-oriented podcasts and reading newspapers also helps you understand the current situation of the market.
Set financial goals: Before investing, don’t forget to set your financial target. As a student, your financial target would be “I want to finance my higher education” or something like that.
Create a financial budget. Without creating a financial budget, every month you’ll be confused about how much you should invest this month. As a student, list down your income sources and deduct your overall expenses. After that, think about whether you are confident to invest this savings or not.
Let’s say all your expenses are incurred by your guardian; then you might get pocket money, right? So try to invest that in the stock market and learn.
Look out for brokerage accounts: Do a little bit of research on various platforms that help you open a brokerage account to buy and sell stocks. Nowadays, there are lots of apps and websites that provide low-cost or brokerage-free trading advantages.
Start with small: For investment, don’t look for big investors; otherwise, you’ll feel demotivated. As a student, start with a small amount, and there are lots of platforms that encourage you to start investing with a small amount.
Portfolio diversification: Rather than investing in a larger number of stocks of a single company or single sector, Make sure you buy a few stocks in different sectors.
I am saying this because if you invest your money in a single company or single sector and that company or sector doesn’t grow, you might lose all your money.
So it’s better to read about various sectors and companies so that you can understand potential growth.
Start with Index Funds or ETFs: After doing lots of research and still being confused about which stock is best, you can go with index funds and ETFs. Index funds help you diversify your investment into many sectors.
Overall, the main motive of index funds is to diversify your investment into various companies, and that’s why they are considered one of the lowest-risk investment options.
Monitor Your Investments: Monitoring your investments doesn’t mean buying and selling stocks regularly. If you’re seeing the consistent downfall of a stock, then check the financial health of the company and understand what the potential plans are for the future.
Be Patient:- As students, we always have curiosity about how stocks perform today, and this daily tracking of stocks may hamper your investment decision in the long term. If you’re confident about the stocks and they still fall, then it’s better to stick to your decision because the market always fluctuates in the short term.
If you want your investment to grow at a compound rate, then patience is important.
Seek Advice if Needed: After considering all the points, if you’re still not confident about your investment plan, you can consult with financial advisors.
Certain financial advisors on the internet would assist you via one-on-one calls and give advice based on your budget and financial goals.
How much can students invest in stock markets?
In general, students can invest around 10–20% of their income after deducting all their direct or indirect expenses.
For example, if you get $500 per month for your expenses from your guardian and your overall expense is around $350, you can invest 10–20% of the remaining $150, which is $30.
After having some experience with how things work, you can invest even more than that.
How much can students expect from the stock market?
Initially, students should not expect thousands of dollars on their investment. First, they should invest a small amount and understand how their strategy works.
How to educate yourself about the stock market as a student
To become an investor at an early age, education about the stock market is a must. Here are some ways and disciplines you can follow to educate yourself about the stock market:
Reading Books: To become a short-term stock trader, you require minimum knowledge about the stock market, but if you want to play a long-term game, then books like “The Intelligent Investor is a must.
Also Read: Is the Intelligent Investor still relevant? Is it worth to Read ?
Newspaper and Magazine: Reading newspapers (financial) and magazines helps you understand the emotions of the market. They also publish financial reports and future projects for the company.
If you’re seeking stocks, then reading financial newspapers and magazines is a must.
Social Media: Various financial YouTube channels help you understand the technical terms used in the stock market. We have given below a list of YouTube influencers that you can follow in your investment journey.
Best finance YouTube influencers around the world are
- Andrei Jikh
- Debt-Free Millennials
- Grant Cardone
- Financial Education
- The Financial Diet
- Ryan Scribner
- WhiteBoard Finance
- Nate O’Brien
Can a student earn from the stock market?
Yes, students can earn from the stock market by educating themselves and taking moderate risks while investing.
Why is the stock market important for students?
The stock market is important for students because it helps them understand various financial concepts and investment opportunities.
What is a good age to invest in stocks?
The 20s and 30s are good ages to invest in stocks because, at this age, you’re financially educated and able to make wise decisions.
Is math important for the stock market?
Math is not that important, but you have to be good with basics like percentages and normal calculations.
Conclusion: Is stock market good for students?
Yes, the stock market is good for students because growing a particular stock, takes time, and if an individual starts at an early age, then by their 30s, they would get compounded returns.
But it’s important to understand every concept of the stock market deeply; otherwise, you’ll lose your investment. We would suggest you first gain knowledge, and if you feel confident about investing, then only you have to go for it.
Overall, we’re confident that the stock market is good for students.