5 best options for students to practice investing

5 best options for students to practice investing

Do you want to become a student investor? Great decision.

Investing has to be a part of everyone’s life. Unfortunately, a lot of people realise it only later in life. Investing also offers its best rewards to those who start early. That’s why the best time to get into investing is as early as possible. Warren Buffet started at 11!

Investing is also a skill that you can gain and hone through practice and experience. Hence, you should go in for the right kind of investment options if you want to learn and improve.

If you buy a 5-year bond and hold it for 5 years solely because you want to start investing, you’re not going to learn much. To learn and practice you need to go for assets that are highly liquid. Plus, you should trade them often.

So here are 5 assets that you can put in your money to become an expert investor.

1. Stocks

Buying stocks is a great way to get into investing. You need to approach a brokering agency and ask them to help you out with investing. Even your bank may be offering brokering services. But today, there are many apps for doing this.

Very large companies need money to fund their new ventures. So they come to the stock market and sell a certain percentage of the ownership to the public. Hence when you buy a share of a company you start to own a minor fraction of the company.

The advantage of investing in stocks: you’ll need to read a little bit about the company you want to invest in. You’ll also need to look at things like how the company’s stock has done in the last year, past trends, how it’ll behave in the future, and other things.

Your reading and research will put you on a solid foundation for you to become a confident investor.

2. Bonds

Bonds are debt instruments. Meaning, by issuing bonds, firms and the government borrow money from people.

Buying a bond and holding it for a long time isn’t going to help you much if your aim is to become a master investor. But the good news is, bonds are tradable. That’s, you can buy a bond for a certain amount and sell it off for a profit before the bond period ends.

Bond prices fluctuate with interest rates. If the interest rate rises, the price of bonds decreases and vice versa. If these statements feel like Greek and Latin to you, investing in bonds and investing, on the whole, will put you on the path to learning things like this.

Investing requires you to have a working knowledge of the financial and economic systems of the world. That’s why you need to begin early while still in your student life.

In the US, bond markets are huge and a lot of people invest in government bonds. You can explore how you can go about investing in bonds in your own country. Like stocks, you can invest in bonds too through apps.

3. Options

Options are derivatives. Another fancy term! Derivatives are assets whose value is dependent on a parent asset. Hence the name ‘derivative’. They derive their value from the parent asset.

Today with a lot of financial innovation there are umpteen derivatives. Futures is a very popular one. But options are a good place to start your journey in derivative investing.

Options derive their value from stocks. The advantage of options is that they reduce the risk level that’s pre-eminent in the stock market.

An option is basically a right to either buy or sell a certain number of shares within a certain period of time. If you buy a call option, you are telling the market that you have the right to buy the stipulated number of shares within the contract period. The put option is the reverse of it.

4. Cryptos

Cryptocurrencies were once living only in the realm of computer geeks. But over a decade after their creation, they’ve become a staple in most people’s investment decks.

What are cryptocurrencies? They are basically computer programmes that you can use to buy stuff and also get paid in. Instead of a banknote, you use a computer programme.

The logic is that money needn’t be backed by something like gold or silver. In earlier days, if you had say $100, the government had to keep a proportional amount of gold to back that amount. But today, the government doesn’t need to keep gold. The banknote gets its value because the government says so!

So, the government doesn’t need to mine more gold if it wants to print more money. It can simply decide to print more money. This is the same concept in cryptos. A computer programme isn’t backed by anything. But it can be given value and be used as a substitute for a banknote!

Cryptos run on a blockchain. All the transactions are done on the blockchain. All you need to do is go to a website where you can trade cryptos, open an account, and buy some crypto like Bitcoin, Ether or something else. Then hold it for a while till the price rises and sell it off for a profit.

Cryptos are highly volatile. As in, their prices swing up and down drastically. That’s what makes cryptocurrencies a super interesting asset to put in your money.

5. NFTs

NFTs are close cousins of cryptos. Because they too run on a blockchain. But they aren’t currencies.

You must be familiar with in-app purchases in video games where you buy a new feature or skin. NFTs are like this. But once you buy them, you can also sell them for a profit. This ability is what makes NFTs an investment option.

You buy something at a lower price, wait for the price to go up and sell it off at a higher price.

So, what’ll you buy? How many will you buy? At what price will you buy? Will the price go up in the near future? What’ll be the effect of the economy on your NFTs? These are all some of the important questions you’ve to ask before you buy NFTs. For that matter any of the above assets.

Finding answers to these questions is what’d be the syllabus of your financial education! So, don’t hesitate. Don’t be scared of losing money. Look at what you can manage and start investing. Losing a little may be only a tiny price you’re paying to become a pro at investing.

Check out CrowdCandy’s platform. You can invest in startups through NFTs for as little as $100. It’s an awesome way to get your investment journey started. So go ahead and kickstart your mastery of investing.