What is investing?

Last updated on
December 7, 2022
Simply put, investing involves using money to buy an asset that you think will increase in value over time. Common investments include stocks and bonds, but putting money into a business or using money to buy and sell things is also a form of investment.

Investing is a great way to put your money to work if you don’t plan on spending it or keeping it in a rainy day or emergency fund. As a college student, you may not have a lot of disposable income, but it’s possible to start investing even with just a few dollars.

As we talked about above, investing is essentially putting your money into assets that you think will increase in value over time. This includes investing in the stock market by buying things like stocks, bonds, exchange-traded funds (ETFs), and more. These investments may increase in value so that you can sell them for more than you bought them for. They may also pay you dividends on a regular basis, which you can think of as rewards for owning the asset.

While the most common form of investing is the type you do by buying and selling stocks, bonds, and ETFs, there are other types of investments too. Putting money into a business run by yourself or a friend in exchange for ownership of the business is a form of investment too. If you’re thinking of buying and reselling things online, buying inventory is also considered an investment.

Getting started

You might think that you need thousands upon thousands of dollars to start investing, but the reality is that it can be done with as little as a few dollars. There are tons of online platforms like Robinhood and Wealthfront that allow you to start investing in stocks, bonds, and ETFs with just a few dollars. Starting small like this is a good way to ease into the world of investing.

Investing always carries some risk, so it's important to be aware of your risk tolerance before getting started. You should always do research and understand the assets you’re planning to invest in too. It’s worth remembering that even though your investments might decrease in value from time to time, markets tend to increase in value by about 10% every year - so think of the long game and you should be just fine.