I think investment funds are the best way to save and invest your wealth as a student. Usually students are not very active in the working world, so they have only a little money to deal with. Even if one has just a couple of hundred euros lying around on their bank account, he should invest the money in a more profitable target such as hedge fund or bond fund (Taloussanomat).
For an ordinary student, investment funds are an effortless way to get a little bit richer, without too much risk. The investor can sleep easily, knowing that he does not need to follow the happenings around companies or markets. He can leave the problems of the financial world in the hands of the experts, who are managing his investment portfolio. Professional investment managers have the potentiality to be able to offer better returns and more adequate risk management. Investment managers spend a lot of time visiting the companies in which they invest. Sure, they can read a research report about a company, but by meeting company executives face-to-face, fund managers can get a much better sense of how the company operates and what advantages it has over competitors.
Investments funds are more like a service rather than a product. Their most important task is to reduce the risk by buying multiple investment securities for the portfolio. Now the student can buy a decentralized portfolio with a minimal risk and a very solid 3-5% annual profit. The investment fund can also deal with several other factors for the portfolio holder. The experts can monitor dividend, expiration date of rates and currency trading if the shares are from abroad.
The investment funds are very flexible, because you can invest a large amount of money once or small amounts by small installments. Regular saving for example every single month is a very profitable idea, because this way tiny streams of money evolve to raging rapids in few a years (Pörssisäätiö).
Before acquiring shares in any fund, an investor must first identify his or her goals and desires for the money being invested. Are long-term capital gains desired, or is a current income preferred? Students obviously prefer short-term money as they have to pay their college expenses etc. Identifying a goal is important because it will enable you to dramatically whittle down the list of thousands of investment funds in the public domain. If you have many years to invest, you may feel comfortable having investments with greater risk and greater potential return. In that case, you would look into equity mutual funds. There are many kinds of equity funds. Some offer high risk, to very high risk, along with high to very high potential returns.
Someone might ponder, what the best time to start investing might be. The answer is simple, right now. The most important thing is to enrich the retail investor, which is you. One shouldn’t fear the risk involved in investing, for it enables juicy profits. The student’s greatest risk is not to invest. Lingering can be costly, because time is money.
SIJOITUSRAHASTO-OPAS. 2014. Pörssisäätiö
Taloussanakirja: Sijoitusrahasto. 2014. Taloussanomat