5 Tips For College Students Interested In Investing

College students have plenty to think about: their studies, finding a part-time job to help with money, and everything going on outside class.

But some students are also interested in investing, to build wealth and pay off their student loans faster.

There are many ways to invest your money. If you're new to investing, these five tips will help you get started.

Read, read and keep reading

There are thousands of books about investing your money the right way. Read as many as you can.

When you come across a good article online or in the newspaper, read it. The more you read, the more you'll understand about the pros and cons of different places to put your hard-earned money.

If you prefer to read online, use a search engine to find trustworthy resources. Free government sites such as Investor.gov are a good place to start.

Focus on practical guides and how-tos about stocks, bonds and funds. Books that teach you how to build a solid investment plan are some of the best you can read. Then you can put what you've learned into practice.

If you can't afford to buy books, your local or college library is the next best option.

Pay off high-interest debt first

When you're paying off debts, you may be tempted to clear the smallest ones first. But if you're thinking about investing, it's usually best to pay off your highest-interest debts first, such as credit cards, loans and car payments.

The longer a debt runs, the more interest builds up. Paying high-interest debts off in full first puts you on the path to a smarter investment strategy.

Think of it this way. Paying off a debt with a 15% interest rate is like earning a guaranteed 15% return. In the stock market, you could lose money instead.

On the other hand, if your debts have very low interest rates, you may decide to pay them on schedule and invest your extra money instead.

Choose a reputable, low-cost broker

Once you've decided to invest, research the brokerage firms available for new investors.

There are many online brokers, and there are also firms where you can meet a broker face to face. The choice is yours, but many new investors choose online brokers. Many now charge no commission on stock and fund trades and have no account minimum, which suits investors starting small.

Look for a broker that offers free educational resources and research. Most also have a mobile app so you can manage your investments on the go. Before you open an account, check the firm on FINRA BrokerCheck.

Some companies also let you buy their stock directly through a direct stock purchase plan, often with low fees.

As a new investor, don't borrow money from your broker to invest. This is called buying on margin. It lets you buy more, but it also magnifies your losses if the market falls, and you can lose more than you put in.

Spread out your investments

Putting all your money into the stock market at once, or into one or two stocks, is risky. If the market crashes, as it did in 2008, you could lose a large part of your money.

Never put your whole life savings into one investment. Keep some money in the bank as an emergency fund.

A better approach is to invest small amounts regularly, every month or every three months. This is called dollar-cost averaging, and it lowers the risk of putting everything in at the wrong time.

Spread your money across many different investments to keep your portfolio diversified. A low-cost index fund does this for you by holding hundreds of companies at once. If one or two investments do badly, you still have the others.

Start as soon as possible

When you decide to invest, start as soon as you can. Young investors have time on their side. The earlier you start, the longer your money has to grow.

Whether you invest in stocks, bonds or funds, compounding means your earnings can earn returns of their own, year after year.

For example, if you invested $100 a month and earned an average of 7% a year, you'd have about $122,000 after 30 years and about $262,000 after 40 years. Returns aren't guaranteed and will vary from year to year, but the example shows how much time matters.

Investing involves risk. The value of investments can go down as well as up. This article is general information, not personal financial advice.