The first thing that comes to mind when I mention investing is probably old people with money to buy shares in companies or stockbrokers sitting behind computers analysing market fluctuations. As much as we want to make money from student hood, it’s very important that you know how to save and grow that money, with great power comes great responsibility after all. It is very possible for students to save and invest, in fact, it is crucial that you start from student age.
Firstly, you need to have a bit of cash which you are not using, cash to save. A disciplined person will save first and spend the rest as opposed to saving what’s left. Also, digging into your savings when you run out of drinks at Newscafe is not cool, I cannot stress the discipline element enough.
Now to get started, there are different types of savings and investments to get into, here are a few that work:
- Stokvels
- Equities (shares)
- Unit Trusts
Stokvels are basically saving schemes where you and a couple of friends gather money at fixed periods (perhaps weekly or monthly) and save it together. In some stokvels, instead of saving the money and splitting it at the end of a cycle, the money gathered at each period will be paid over to one member. For Instance, if your stokvel has 8 members, and you guys each contribute R500 monthly, then each month, someone will receive R3500 (excluding their own contribution) from the group until all members have been paid and then the cycle repeats itself.
Equities are very risky and you would need to have extensive knowledge on what you are doing. So before considering starting with buying shares, get a good understanding about what goes on in the market and how everything works. When your understanding is pretty good, register for an online share trading account with your bank, this would be cheaper than going the traditional route and getting one on one services with a brokerage firm. When doing it yourself, your bank, or whichever online platform you use will charge you a commission on the shares you buy and sell. Minimum deposits will vary across platforms. A very good platform is eToro.com, just like other platforms it allows you to deposit money and start buying shares, but the brilliant thing behind eToro is the feature that allows you to copy other investors’ trades, so instead of going through extensive research and losing money dismally as you start out, you can have a look at the top performing investors on the platform and copy their trades. You could find yourself trading like a professional with no experience whatsoever.
Unit trusts reduce the risk of investing in stock markets, they are collective investment schemes for your money, along with thousands of other people’s money will be combined and professional traders working for firms will trade on your behalf. You’ll have to register for one with either your bank or you could consider looking into companies like Old Mutual or Satrix. With unit trusts, you would have to put in a minimum deposit monthly, these are very beneficial in the long term so after a few years of investing in them, you could be able to pay the deposit of your first car or apartment when you leave school.
Investing is very risky but also very beneficial when done well, it is something you should rather start doing now so that you have better control over your finances later in life. The sooner you start saving and investing the brighter the future will look for you.