How to Invest in Stocks As a Student With a Low Budget

Stocks tend to rise over long periods of time.

Stock prices always rise in the long run. This maxim is based on the fact that the economy expands and population rises over long periods of time, and the stock market just reflects this reality. However, if you are a student, making an investment in the stock market may prove difficult as you do not have a steady source of income and you have to spend most of your time studying. Still, you can make some little investments that can yield a handsome return in the long run (if you choose the right stocks, of course).

Instructions

1. Find a part-time job and save some money. Use some of your spare time to earn some cash to cover your short-term needs (food, accommodation, books, etc.). However, try not to spend all of your money, but save as much as you reasonably can. These will be your first investment funds.

2. Open an account with an online discount brokerage firm. Having a low investment budget, you need to shop around to find a broker with the lowest commissions.

   You can transfer your funds into your account using a bank wire transfer, which typically takes about two to four days to complete. Some brokers also except PayPal, but this is not common.

   Executing a trade is fairly easy to do, and all you need to do is click "buy" or "sell" at the price of a stock in the trading software your broker will provide to you. Your broker will actually do all the buying on the stock exchange.

3. Wait for a buying opportunity. The old saying goes that "you should buy when there is blood in the streets," meaning that the best time to purchase assets is when there is a crisis and assets are undervalued. Be prepared to wait. Buy when the stock price has been falling much too fast and the fundamentals of the underlying company (revenues and profits, basically) are strong. Even if you do not buy at the absolute market trough, you can make money if you are prepared to wait long enough.

4. Buy the undervalued stocks with your limited funds. You do not have to invest thousands of dollars. If you just have a couple hundred, you can try your luck with those. Even if you won't make a lot of money, you will learn how to invest in the stock market, which will be useful when you do eventually have some real money available for investments.

References

• CNN Money: How to Buy Stocks
• MSN Money: Buy Your First Stock or Fund