This week I am going to continue talking about how college students can start investing. If you didn’t read my article on why you should invest and budgeting, check it out here. Investing is really just a way to reach your goals, but there is such stigma around it. However, this is quickly changing thanks to several apps that are turning the finance industry upside down. Two of these apps are Stash and Acorn.
Before we get into the actual apps you will need to understand a couple investment terms (if you are familiar with these feel free to skip). The first of these is stock. A stock is basically a piece of the company that they are selling in order to generate cash. Many times when you own a piece of the company and it does well you will be given a portion of the profits. This is called a dividend, and it is just the name of the payment that you receive from the company. Next you will need to understand a bond. While a bond is similar to a stock it is not the same. A bond does not give you any ownership in the company. It is more like a loan that you give the company that they promise they will pay back in a set amount of time (usually 1 year). The payments that you receive from the bonds are called interest payments. The last thing that I want to cover is an Exchange Traded Fund. This is really just a collection of diverse stocks and bonds. It is desirable because this will reduce the risk that some bonds could go unpaid or that companies could go bankrupt.
The first app that I’ll be going over is Stash. This is a simple app that allows you to start investing with as little as $5. This is why it is a much more attractive prospect for college students. You can also do recurring payments of any amount. The cool part in this app is that you can select what kind of business you want to invest in. Whether you want to invest in tech startups or a socially aware companies, all of these options are available on Stash. They give you over 20+ different categories of ETFs to choose from. You can also base your investment on performance and just see which ETFs have been doing the best. The main drawback to Stash is the fact that you can’t invest in individual stocks. I think for many beginning investors, however, this is not necessarily a bad thing.
Acorn is the next app that I want to highlight. This app is very sleek and user friendly. It also allows you to start investing with small amounts and/or recurring payments. One cool feature that Acorn has that Stash does not is the change roundup feature. If you choose to engage this feature, Acorn automatically rounds up every purchase to the next full dollar and then invests the difference. This is a great way to invest absent-mindedly and although it’s not a lot of money, it adds up over the long-run. One drawbacks of Acorn is that you don’t have as much control as you do with stash. You have the options of choosing only, 5 different styles of investing from conservative to aggressive. With these options it is important to think about risk. Whenever there is more risk you are likely to make more money versus a more secure option with a lower payout. This is called a risk-premium. The final (and best, in my opinion) feature I want to highlight is really quite unique. Acorn has a feature called Found Money. This is basically cash-back on purchases with partnered vendors. This money goes into your Acorn account and is automatically invested. 
Both of these apps are really great starting points for someone to get their feet wet, so to speak, with investing. Both of these apps need only small initial investments and require no knowledge of actual stocks. When deciding between the two, you really just have to ask yourself do you want more control of how your money is invested or, do you want some really cool features.
Next time I will be back with more on how the average college student can start their investing journey. So check back in for that for sure!
