Building a personal financial plan is a marathon where it is important not to run faster but to start running earlier. Even if you are a student, you will always have some income, at least a tenth of which can be spent on investing.

When should a student start investing?

If the student receives a scholarship, they can start investing 10% of it. The method works for one simple reason, no matter how ridiculous it may appear: you develop the habit of investing. And when a person goes to work, develops a business, has a steady stream of money, there is no question of what to do with it. Also, for example, when you go to the gym, nobody puts on weight right away.

Where to get money for investments?

You can easily live on 90% of your income. Again, an increased scholarship, work, money from the business. You can and should work to ensure that your monthly income also grows. Then there are more investment opportunities.

Business vs. Self-employment

Many people confuse business with self-employment. How do you make it out? You’re self-employed if, for example, you work as a Spanish tutor. In that case, your “ceiling” will depend on how many hours you can charge. In addition, there is a limit on the cost of an hour of such a lesson. In business you hire a Spanish teacher, take money from him for finding clients, then you can hire a second, third, speaking English or French, and, in fact, your income will be limited to the number of such specialists.

The same thing if you work as an essay writer and do some kind of school/college work for your classmates. Undoubtedly, you will provide a quality essay writing service, but your earnings will depend on the number of people who will need your service. On the other hand, you can work for a company that will look for clients for you, but in this case, you will no longer manage investments or be self-employed. This is more of an option of where to make money to start investing.

Logically, a business always involves development, and there is always a limit to self-employment.

Self-employment is not a bad thing. But you need to be clear about who you are and who you are not.

What can you invest in?

A product approach is possible when you have money and you want to invest it. This can be a bank account, open-end fund, insurance, currency, securities, etc. Alternatively, you may take a goal-oriented approach and ask yourself, “What do I need in the next 2-5 years?” Do you want to save money for a vacation? To purchase a home? This must be defined precisely. In this situation, you’ll need to create a personal financial plan and select a unique financial instrument for each goal.

There are four categories in a portfolio:

1. The liquid part is small expenses that can be quickly taken out and spent on needs, a “safety pillow” for unpredictable expenses. Profitability is 7-8% per annum. This includes bank deposits.
2. The defensive part – property insurance, health insurance, liability insurance. Insurance can be risk insurance (against traffic accidents, ticks) and life insurance – when every year we contribute a certain amount of money. This story is definitely not about “making money,” but about “building up a reserve.
3. The investment part is about “saving and earning”. It makes up the largest part of the portfolio. These are stocks, bonds, structured products with rates higher than bank deposits – 12-20%.
4. The speculative part is funds for operations without restrictions on risk and profitability. For a year, you can earn both +70 and -70%. This story is about “playing on the stock exchange”. This is where 5-10% of the capital is usually directed. It is normal if there is no such component in the portfolio at all.

The place of cryptocurrency in the portfolio of a normal person – in the speculative part. The main problem with cryptocurrency is that it cannot be exchanged for real money. Until this problem is solved, it will remain something unserious.

In conclusion, experts from the Essaywritercheap.org writing company recommend to students some interesting books about both finance and “life”: “Career Advantage” by Stephen Covey, “Make Your Bed” by William H. McRaven, “The First National Bank of Dad” by David Owen, “The Road to Financial Freedom” by Bodo Schäfer.