Investing as a College Student
If you have a part-time job or have some income that isn't going directly to your education, you might consider investing that money instead of putting it in a low-interest savings account at the bank. One way to do this is by setting up a brokerage account. Brokerages offer low risk investment options that you can take advantage of, but you'll want to get some help before you get started choosing a broker.
Using a Discount Broker
One benefit of online brokers is that many of them offer low commissions relative to traditional full service brokerages. But not every discount broker is the same, and trade prices can vary greatly. For example, you might be expected to pay from $7.99 to $20.99 per stock or equity trade. Examples of popular online brokers include TD Ameritrade (tdameritrade.com), Scottrade (scottrade.com), E*Trade (etrade.com), and Charles Schwab (schwab.com).
When you investigate the fees of each brokerage, you'll want to check the price of market orders as well as limit orders. Also, firms might charge higher commissions on certain purchases, such as purchases of 1,000 shares or more. Commissions are not the only form of fee you need to worry about. Most brokerages charge maintenance fees if you have less than the minimum account balance.
Unlike full service brokers, online discount brokers offer no advice or recommendations. You'll be expected to do your own research and fact checking before purchasing investments. Some brokers offer third party research tools, such as Standard and Poor's stock reports, and others provide their own in-house reports.
Find Campus Resources
If you're worried about the fees you'll be charged, you want to do additional research on online brokers and investments or you just want a better understanding of how discount brokers handle your money, seek out help from the services available on your college campus.
You can find numerous investing courses available through the business school or through continuing education departments. Some schools offer online courses on investing that might not have a fee. Check with your academic advisor for course options.
Stop in to your student services department to see if they can offer you any support. Some student services centers feature seminars, workshops or online documents that you can use to learn more about discount brokers and investing.
You also might be able to find investment clubs or programs available through your college. These programs provide additional training to help you make decisions about choosing a broker and can introduce you to other students with similar interests. Investment clubs likely also have resources that can help you with your investment choices, such as podcasts, website suggestions or counselors.