How do you secure future profits as a student?
With all the costs of living, food and experiences, it is often difficult for students to save even a few hundred crowns. We were in that situation, too. But you just need to learn the basics of financial literacy while studying and you will get a head start for life (at least the financial one).
Learn to think about money differently
For most students, money is mainly a source of fun and experience. They come and go again. But the money you have now can also become a source of additional money in the future (it sounds tangled, but we explain how below).
The 500 CZK invested today will have an average appreciation of 10% per year for twenty years worth about 3 300 CZK (using compound interest and excluding inflation). When you put your money into an asset, you are actually investing in your future self.
Similarly, only on the contrary, it works with loans and mortgages. When you take out credit, you are borrowing theoretically from the future -- your future self will gradually pay off your current obligations.
Option 2 seems a little less prospective. Isn't it better to leave your future self some money? Think about money in the long run.
Even small amounts invested work for you and generate additional money.
While you can fully devote yourself to studies, work or hobbies, finances will multiply on their own.
Use your most powerful weapon
The richer a person is, the easier it is to generate additional returns. And the younger he is, the more time he has to get rich.
But if you don't have 200 million, you can use the time and compound interest. When investing CZK 9,000 per month for 30 years and incorporating so-called compound interest (reinvestment of income) you will have 20 344 392 CZK. Sure, inflation will eat up some of the value of that money, but the total sum of the money deposited over the entire period will be only 3,240,000 CZK.
Of the 3,240,000 CZK invested, it becomes 20,344,392 CZK, which means that you get 17,104,392 CZK — not the worst.
Only thanks to time (and appropriate investment).
Suppose you want that $20 million ready for a comfortable retirement. If you are currently 22 and retire at 62, you are even 40 years old. In this case, just under CZK 3,200 per month is enough for 20 million. He has that kind of power in investing time.
Low age is your most powerful weapon, and the sooner you start using it, the more powerful it will be. Start investing regularly (putting aside money each month for which you could buy something) now seems to be the hardest part. But the trick is that you don't have to invest thousands a month — a few hundred crowns are enough to start with.
With a regular monthly investment of just CZK 500, you will have more than CZK 3 million in 40 years.
Educate yourself (by investing)
In addition to getting an advantage over others with an early start in investing and making the most of the compound interest principle, you also get an education.
It's called “skin in the game.” Once you have even a little invested, you will want to monitor the evolution of the economy, the situation in the markets and the behavior of various assets. When you get to invest more of your income in the future, you will already know where to invest smartly and maximize your profits.
How and where to train effectively in the field of investing:
- Keep an investment diary — track the progress of your investments, write down mistakes, record good decisions, monitor how much you have invested in, and gradually evaluate all the information.
- On the Internet you can find a lot of quality resources, just look for verified ones. For example You can get the basics about investing in real estate on our blog.
- Follow investors on social networks, such as Vojta Žižka or Ondřej Koběrský. You can find educational content on YouTube, at Instagram also on TikTok. Make procrastination on social networks an effective education.
Where to start with education? Download an e-book about investing in times of inflation.
Also learn to gradually diversify your portfolio appropriately by investing in different assets. Watch what dips and price rises do to your psyche and try to work on managing emotions. Investing under the influence of euphoria, fear or panic is one of the most common mistakes of both novice and advanced investors. But the influence of emotions decreases as experience increases — good news!
Learn to work with a personal budget. Keep track of your income and expenses and divide them into regular and irregular.
Do you have a balanced budget? Maybe half?
Try to find places where you can save. For example, you:
- instead of ordering pizza boil at home,
- instead of exercising in the gym, try outdoor Workout playgrounds,
- find brigade for a few hours a week.
There are different ways to find money for investment in the budget.
But you may be wondering what a few hundred saved will do for you.
You can also microinvest a few hundred crowns monthly
Investing is not just for millionaires. There is also a so-called microinvestment, in which you only need to invest 500 crowns. Monthly, weekly, once every six months. That's up to you. You can start slowly and gradually add money.
Micro-investing will not only provide you with returns, but will help you navigate the financial world, which from an unknown set of units, concepts and graphs becomes a comfort zone.
Most microinvesting applications are intuitive, simple, and therefore very practical. If you are just starting out with investing and only want to invest small amounts, there is nothing more appropriate than microinvesting. Do you wonder if the profits from microinvestments are long-term? Yes, they are.
Investing costs you almost no time. Just download the mobile app, verify the account and you can start building your profits. You can try investing with Investown too, but we'll leave that up to you 🙂