Investing Money for College Students
Tips on investing money for college students includes financial markets to choose, risk classes to think about, and your overall investment portfolio.
While in college, the education is typically funded by pre-existing funds, loans, grants, and income earned while in college.
If you do investing while in college with the college money or for a college student to fund the studies, importance should be placed in risk assessment.
In this context it should mean safeguarding the principal, while getting good inflation cover, with a good risk adjusted return.
The problem with more volatile, or risky investments is that they have greater chance of going very negative in a period when you need to withdraw the funds to finance the studies, possible even resulting in a shortfall of funds to finance the studies.
There are many types of financial instruments that historically offer very good inflation-adjusted, minimal-risk returns.
Many of these investments are in the fixed income and money market, especially for those investments that the payouts are done by a governmental entity with taxation power as an assurance of repayment of principal and interest payments.
Also, when building your portfolio, you need to think about the liquidity of the investment portfolio, which means how fast you can turn all the investments into cash.
All investors go though times when they need to turn parts of their investment portfolio into cash, and you should plan in advance for the time that this affects your portfolio.
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