The future is uncertain, especially for students. You emerge from having studied for years, ideally for a financially secure career. But this is no guarantee your financial future will be smooth sailing, since markets are in a constant state of change. Even in terms of careers, no one can guarantee continuation. Jobs the world believes are essential can be obsolete within years, meaning all your hard work and effort leads nowhere.
To that end, students should consider how to take steps in creating a solid, financial future. The most common way to pursue this is with investments. Unfortunately, many – especially students – are unaware about what investments are.
Defining investments
The financial market, banks and all related institutions are often incomprehensible to most people. However, with investments, the overarching idea is simple. Investopedia defines the various parts of investments in a comprehensible way:
“An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future.”
Various things can be and are purchased with the hope they will generate an income, or become more valuable, over time. This nets the investor more return on the initial investment.
Why investments
There is no perfect guarantee that will net you financial stability or prosperity. If there were, everyone would have wealth.
Instead, we have multiple avenues.
Students, ideally, would have acquired essential skills helping them survive in the working world. Earning an income is only the beginning, since you want to create a future where your money works for you.
This is why people focus on investments instead of merely saving. If you do nothing but store your money, you won’t generate as much in future. Though, the benefit of saving is your money will be far safer.
When you think of investment, you might think buying shares in listed companies counts. However, this would be incorrect. As Fin24 notes,
“Buying shares in listed companies is not investing; it is merely a form of saving. The only time it is an investment is when you are providing funding for future production, and this only occurs when the company lists for the first time.”
Saving is about protection, whereas investment is about essentially generating income. Note how, even here, it can become somewhat confusing.
You are advised to look at various investments, especially safer ones, if you’re trying your hand for the first time. A unit trust investment is ideal for this, since one of the benefits of unit trusts is they’re safe from theft.
Speak to a professional, but don’t let the complexity put you off. Students must start considering their financial future as soon as possible.