“Building a personal financial plan is a marathon, where it’s important not to run fast but to get out early. Even if you are a student, you will always have some income, at least a tenth of which can be used for investing. Lets know how to start investing as a student.  

Where do you get the money to invest from?

You can live comfortably on 90% of your income. Again, increased stipends, royalties, money from a business. You can and should work to ensure that your monthly income is also growing. Then there are more opportunities to invest.

Business vs. self-employment

Many people confuse business with self-employment. How to make a difference? You’re self-employed if, for example, you work as an essay writer. In that case, your “ceiling” will depend on how many hours you can take on. In addition, there is a limit on the cost of an hour of such work. In business you hire a Spanish essay writer, take money from him for finding clients, then you can hire a second, third, speaking English or French, and your income will be limited to the number of such specialists. Logically, a business always involves development, and there is always a limit to self-employment.

 What can you invest in?

A product approach is possible when you have money and want to invest it. This can be a bank account, insurance, currency, securities, etc. Or you choose the approach from the goal – what do you need in the next 2-5 years? To save for a vacation? Buy an apartment? You need to clearly define it. In this case, you make a personal financial plan and select a specific financial instrument for each goal.

There are four categories in a balanced portfolio:

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Liquid portion – small expenses that can be taken quickly and spent on needs, a “safety cushion” for unpredictable spending. The yield is 7-8% per annum. This includes bank deposits.

The protective part is property, health, and liability insurance. Insurance can be risky (from an accident, a tick) and accumulative life insurance – when every year we contribute a certain amount. This story is not about “making money”, but about “creating a reserve.

The investment part is about “saving and earning”. It makes up the largest part of the portfolio. These are stocks, bonds, structured products with rates higher than bank deposits – 12-20%.

The speculative part – funds for operations without risk or return limits. In a year you can earn both +70% and -70%. This story is about “playing the stock market”. This is usually where 5-10% of capital is allocated. It is normal if there is no such component in the portfolio at all.

 In conclusion, we recommend several interesting books on both finance and “life: “Career Advantage” by Stephen Covey (author of the bestseller “7 Skills of Highly Effective People”), “Make Your Bed” by William McRaven, “The Adventures of Major Zvyagin” by Michael Weller, “First National Bank of Daddy” by David Owen, “The Path to Financial Independence” by Bodo Schaefer.

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