College students from Adelphi University to Yale University who are looking to the future are putting their money into investments now so they can reap the rewards later on. However, it’s no secret that most college kids don’t have a lot of extra funds to put into investments. Therefore, it’s a good idea to get creative about where you put that money.
We all know investing incorporates some amount of risk and you could lose part or all of your initial capital. However, there are a number of options available where you can put up a small amount and avoid high-risk situations at the same time. Here are some of the creative ways students are investing in college while enjoying a healthy return on their money.
Money Market Funds
They are one of the easiest ways to make a profit while mitigating as much risk as possible. Your deposits are almost guaranteed to yield a return as well as protect the net asset value of your capital. Shares will only fall to a minimum of $1 should they drop in value but that’s not likely to happen with money market accounts.
Designed as a way for state governments to borrow money in order to fund a variety of projects, municipal bonds are a good way to invest. You can be assured that your money will be paid back since the borrower you’re dealing with is at little to no risk of defaulting on the loan. Plus, there are no federal income taxes to worry about on the money either. Some state laws also exempt the money from taxation.
Certificate of Deposit
This is another great way to safeguard your initial investment while seeing a return on your money. A certificate of deposit or CD is an investment vehicle that lets you choose the length of time you wish to invest at a fixed interest rate. They’re available from most banks or brokerage firms and are best suited for those college students who don’t need to tap into these funds for a long period of time. The longer your money is set in the CD, the more you can see on a return. But be sure you let the CD mature fully or you could be paying stiff penalties for early withdrawal.
Peer to Peer Lending Services
Maybe you want to invest in other people instead of funds and bonds. You can offer to lend money to those who need it and get a handsome return on reimbursement. While this can be an interesting method of making passive income through investing, be cognizant of the fact that the borrowers seeking money through these services have usually been denied through other sources. There is a higher risk of losing your initial capital. However, the return on these investments can be much higher as well. You just need to be sure your homework first.