Submission: Students encouraged to invest early to build wealth

For many college students, deciding how and where to invest seems like a task best left for the distant future. Any young person will admit that investing is a no-brainer in the long run, and many even dare to dream about what kinds of decisions they’ll make with their money years from now when they’re swimming in piles of it.

But what the vast majority of college students don’t realize is that the journey toward accumulating wealth through smart investment should start right now. By keeping in mind a few easy tips and avoiding wrong turns, college students can easily begin building their financial futures before they even leave campus.

Here are some suggestions about how to go about investing in a measured and productive manner.

First, investing isn’t just for rich people. It often seems like the only people who benefit from investing are those who have a lot of money to begin with. While the wealthiest investors are those we hear about the most in the media, in truth, you can start investing with any amount of money, big or small.

For example, if you begin with $1,000, or even a few hundred dollars, at a rate of return as little as five percent or so annually, that amount alone could turn into thousands of dollars, which could be crucial to your financial future by the time you’re 35 or 40.

If, in addition, you commit to adding small amounts of money into an investment account periodically, your return over the same period could grow to tens of thousands of dollars.

Second, remember to diversify. Don’t get caught up in individual stocks. Many new investors are tempted by the prospect of investing a lot of money into a narrow selection of specific stocks, because they see temporary growth, or because the names of the companies are recognizable.

But the fact is individual stocks are volatile. You never know when external circumstances will influence a certain company or sector, and completely change the outlook of its performance.

That’s why it’s crucial to diversify your investments and to make sure you place money strategically across a broad array of companies and industries. That way, even if one company or sector underperforms, the overall growth of your portfolio may be intact.

Another important thing to remember is to take your time to consider your options carefully – don’t rush. Investing wisely is a goal well within your reach, but it shouldn’t be taken lightly. Naturally, there are personal investment decisions that only you can make, and you should consider your options thoroughly before making any investment. But consulting with an experienced financial professional is a good way to make sure you’re on the right track.

Lastly, be mindful of fees and expenses. Investing doesn’t come without its own cost. When you use a financial advisor or an online platform to invest, you pay for that service, whether it be through a per-trade fee, an annual fee or a commission based on your rate of return.

People who aren’t mindful of the long-term impact of these costs are liable to lose out on thousands of dollars. Understanding the structure and long-term impact of your investment expenses is a critical element of maximizing your earnings over time.

Whether you’re in college or at the height of your professional career, your decisions about personal investment boil down to risk management. It’s crucial to strike the proper balance between taking risks that may lead to financial gain and preserving the assets that you have.

In that way, college is the perfect time to begin investing. You can start small, and by the time the stakes become higher, you’ll already have an idea of what works for you.

Palmer is a financial advisor with the Private Wealth Management division of Morgan Stanley in Los Angeles and a UCLA alumnus from the class of 1983. The views expressed in this submission are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates.