There is a lot of publicity about how much a struggle it is for college students to make ends meet in today’s economy. For those students who are lucky enough to not have to worry about money, it might seem that not enough attention is paid to what their needs might be. We have created a brief overview about investing for wealthy students whose net worth is grater than $100k. In this way, those college students who will not be burdened with debt upon graduation can instead focus on how best to plant for their future.
- 1. Life Insurance
Although most college students do not even think about life insurance, much less have a life insurance policy, this is one of the best long-term investments at college student can make. Since purchasing a policy is much less expensive for a college student than a middle aged person, it is easy to invest a few dollars per month. At the same time, a life insurance policy grows in value over the year, and depending on the type of policy purchased, can be cashed out in the event of an emergency. Although most college students are not yet married or thinking of a family, a life insurance policy will help guarantee security for the future.
- 2. IRA Accounts
A Roth IRA is not considered an investment, but when a college student can contribute to an IRA he is investing for the future. There are several different types of IRA’s available, and some are tax-free while others are tax-deferred. For the wealthy college student, a Roth IRA is ideal. While the contributions to the IRA are not tax-deductible, there are also no taxes imposed upon the withdrawal of funds from this type of IRA. For those who are able to contribute to an IRA account, this can become a significant retirement fund if allowed to mature.
- 3. Mutual Funds
Mutual funds are a good way for wealthy college students to invest their money without having to keep track of it. A Mutual Fund has a manager whose job entails making sure the funds perform adequately, as well as make changes in the funds invested in when necessary. In this way, those students who have a net worth of over $100K can safely invest their money into a mutual funds account and simply watch it grow over time. This is also a relatively safe way of investing funds, as a typical investment portfolio will contain both corporate bonds and mutual funds.
- 4. Stocks
More risky than traditional investment opportunities, most college students would consider investing in stocks to be a gamble they are unwilling to take. However, if the standard practice of “buy and hold” is adhered to, this can be the ideal investment for college students who have excess funds to “play” with. Those wealthy students can afford to invest in companies whose stock increases over time or have indicated a longevity that lesser expensive stocks cannot boast of. Purchasing blocks of stock and then simply holding onto them (not selling at the first sign of a downward swing) can create a large amount of wealth over time.
Although there are many other investment opportunities for wealthy students, it would be impossible to list all of them here. It would be wise for affluent college students to consult with an investment company like Personal Capital. This site offers financial management tools as well as investment advisors and personalized plans for any college student who wants to plan for their future.
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