A smart student's guide to stocks, brokerage firms and understanding how to invest money wisely

Ahmad Ardity | Wikimedia Commons

Ahmad Ardity | Wikimedia Commons

By graduation, students have racked up a significant amount of debt: student loans, credit card bills and other mounting costs. With this, if you are moving into your first place, you have rent, utilities, cable and other necessary expenses. It takes some time to figure out your budget and put aside some extra cash. The question is what to do with this money? Is it the right time to invest in stocks? And if so, how much should you put in?

Investing now is a smart move. You can realize a solid return from your investment and build wealth as you give your money time to grow.

The first thing that you should do is realize your goal. “Nobody has a crystal ball to determine how stocks will perform tomorrow — or during the next 10 years. So instead of trying to buy stocks based on market ups or downs, I recommend determining the time horizon for when you’ll need to draw down on these funds to cover your retirement expenses,” Lisa Brown, a partner and wealth adviser at Brightworth, said to CNBC.

She went on to say, “Once you know this period of time, it’s much easier to determine how much stock you should own.”

Next is figuring out how much to put in. You can start out with a small amount of capital, $25 to $100 dollars, and gradually add by investing on a regular basis. When investing, you should ask yourself how much you want to risk without it impacting how you live, as well as what expenses you have.

In deciding on a brokerage firm, there are two options: You can go with an online firm or a traditional firm. Look into each and understand what the benefits are of each that will suit your needs.

When you are ready to start purchasing stocks and bonds, do background research on the stocks and invest based on how they have performed in the past and the industries that they work with.

Once you get comfortable in how the financial market operates, you can expand your investments. There are a lot of stocks to choose from “A number of academic studies are in broad agreement. The best returns over the long run are achieved by highly diversified stock funds with low management fees that emphasize value over growth,” explained Patrick Gleeson, Ph.D., in a blog article published on The Nest.

Investing in your future is a good practice. It does not take a lot of money to get started. “By way of example, a 30-year-old who invests $1,000 per month and earns an average 7 percent return on her stock portfolio will have accumulated about $1.2 million by the age of 60,” explained Brown.

All experts agree that the younger you start, the more opportunity you have to allow your investments to grow. After you have figured out your budget, how much money you have to invest, who to invest with and what to invest in, your next step is to just get started.

There is a lot of information available online and books that you can read to give you more insight into the process in order to help you get investing.