Quora Answer: How Do I Go About Investing the Money I Earned during College?

The following is my answer to a Quora question: “How do I go about investing the money I have earned during college?  I will have $40,000 at the end of the summer, and no loans.”

Have a goal.  Investing with no goal means that you will eventually see no reason for your funds to be there, and you will either be saving for the sake of saving, or take it out and spend it.  It is a psychological thing.  You can either look for a good financial advisor, or choose to educate yourself.  It would be better done simultaneously.

I suggest you put aside some funds to get a good hospitalisation coverage if you do not already have any, and to consider coverage for death, disability and critical illness.  Death is cheap, but disability and critical illness can wipe out you wealth, which defeats the purpose of investing to grow wealth.  Invest in funds instead of directly into counters. $40,000 is not a lot of money, and you need an affordable way to grow your portfolio whilst also spreading your risk.  Consider a good mix of equity and debt instruments. For beginners, you are normally looking at 60% in shares, and 40% in bonds.  This does not grow fast, but it is lower risk, so a drop in the market does not give you a heart attack.  As you get the hang of investing, and grow in understanding of the market, you can adjust this accordingly.