College Education

Why You Should Invest in College

As college students we usually envision our financial investments starting around 30 years of age, after we have received our degrees and worked for a few years. This common misperception is so far from the truth because investing is proven to benefit those who start early. That is why I’m going to show you why it is best to start investing while you are in college.

I’m going to show you two scenarios, one where the a person begins investing and the end of their senior year of college and another where a person who waits until they have spent eight years out of college working and began investing at 30. The interest rate for each scenario will be fixed at 10% because that is the average return from the stock market over time.

College Education

So let’s take our imaginary student named John and say that he worked throughout high school and college and invests $10,000 in a mutual fund at an interest rate of 10% at the age of 22. In the second scenario Paul invests $20,000 in a mutual fund at an interest rate of 10% at the age of 30.

If John were to let his initial investment of $10,000 sit at annual rate of return of 10% until he turned 65 years old then he would earn $592,400.69. If Paul were to let his initial investment of $20,000 sit at annual rate of return of 10% until he turned 65 years old then he would earn $542,048.74. Even though Paul invested twice as much as John, he still made less from his investment. The key to this difference is the fact that John invested much earlier. The key factor to making money from investing is the amount of time that your interest accrues. This is the reason why you should invest early. If any of these two men would have added more money to these investments in monthly increments then their payoffs would have been much larger.

Hopefully the above scenarios showed you why it is crucial to invest earlier in life. If you are like me and do not have large sums of money to put towards investing while you are in college then consider buying gold and silver bullion or investing with an online broker such as E trade. I started buying silver just two years ago and now have over $2000 worth of it. Just remember that any amount of money put towards investing, not matter how small, will benefit you in the long run.