Why Invest While In College?

“The most powerful force in the universe is compound interest”

-Albert Einstein

Most college students don't realize how powerful and effective investing in your late teens and early twenties can be. Old Albert there wasn't exaggerating when he described compound interest. Compounding interest is when you re-invest the profits of your savings back into your savings, so that your money grows exponentially. Invest it and forget it, if you will.

You might try to rationalize not saving because you don't have a well-paying job. The numbers, however, throw out that excuse. To give you an idea of how, if today you invest $1 in a decent mutual fund that averages 10% growth per year, in 50 years you'd have about $117.39! If you work for 6 dollars an hour and invest $2 of that per year, you'd have to make about $200 per hour when you're 50 to invest the same amount! Saving when you're still young is worth it.

It's definitely not too early to look into an IRA, or Individual Retirement Account. Especially considering that either 1. Social Security will go bankrupt before we retire or 2. Taxes will skyrocket to pay for social security by the time we retire, having enough money saved to retire will be critical. IRAs are very useful because the IRS doesn't touch IRAs until you retire!

You may be thinking, "Man, I work a full time job and go to school, and still just manage to get by. How am I supposed to invest?" Remember, you don't have to invest large lump sums, just a small steady stream over time. For instance, you might order Chinese once every week or so. My usual order is pork lo-mien and egg foo young (it'll last me a couple of meals!). The pork lo mien from Jing-Li's is about $6. A package of ramen runs about 25 cents. If for that one meal I enjoy my egg foo young but substitute ramen for the soft noodles, I could invest $5 of the savings. If I did this every week for one year, not counting interest, I'd have about $250 saved!

While $250 again might not seem like a lot, having a little money in the bank goes a LONG way to reducing the stress and anxiety of living paycheck to paycheck. If you were to put that money into an IRA however, it would be worth about $30,000 when you retire! That's more than your first year's salary after college, I'll bet. With a little investing, your sacrifice of lo mien could grow into an entire year's salary.

College Textbooks: Overpriced Yet Quickly Depreciate

Textbooks....everyone gripes about their price and often about reading them. It's simply a matter of supply and demand that textbooks are so expensive, yet they often come close to being the feather that breaks the camel's back. Especially for incoming freshman who are pressured into buying from the school bookstore before classes start, the total cost can range from $500-$1000!

You (or especially your parents) might feel that you need to buy the books right away before classes start, or you'll be at a serious disadvantage. However, a few things can mitigate the disadvantage of waiting for a used book to be delivered. First, check to see if your school library keeps copies of the textbooks you'll be using. You can often borrow those while you wait for your book to be delivered. Second, get you know your neighbors in the class, and call upon them when you need your book. Establishing these sorts of relationships early will make the rest of the semester go much more smoothly. Third, if you have teaching assistants, they often have the books that they rarely use, so ask if you burrow from them. You wouldn't need much more than a week, so they'd be obliged.

I highly recommend purchasing your books used online (with the exception of workbooks). Also, don't be afraid of buying an older edition of the text. Most book publishers change very little from edition to edition, and if the homework problems are different, you can look of a friend's text while in a study group. For the minor inconvenience of an older edition, you pocket MAJOR savings. For example, if I bought all my books new this upcoming semester, I would've shelled out about $700, as a microbiology major. Buying my books used online, including shipping, cost me only $260!

Some might say that the $440 I saved is nothing compared to the price of room, board and tuition. While this is true, $440 for a frugal college student will go a long way! If you loved Chinese delivery for instance, how many cartons of egg foo young (my favorite) could you buy for that amount? About 80 cartons!

Now assume lets assume that I bought the books new, then planned to resell them. I would, assuming I sell them without a middleman, probably make that $260 back. I'd be taking a $440 loss. Because you gain almost the same value from old textbooks as new, buying new textbooks are one of the worst investments you can make.

As far as where to buy used textbooks online, there are many options. I tend to prefer going through hubs like Amazon and Ebay because I like the extra security they provide when shopping with individual merchants. Also, be sure to look up used bookstores in your city. Here in Rochester, there's a great store that trades in most of the books local colleges use regularly. The prices usually aren't better than those online, but you save on shipping.

First Day On Campus: The Move-In

The last of the graduation parties have come and gone, you've enjoyed the soon-to-be luxurious comforts of home for the last time, and the luggage is finally packed. You're ready to trade in the life and familiarity of a high school student for the long hours and crazy nights of the college student. Depending on where you come from, your first contact with your new neighbors can be amazing or absolutely overwhelming.

If you are sharing a dorm room with one or more roommates, struggle to be the first one to the room. If you're flying in, come a day early so that you can be first in the move-in line at the crack of dawn. At the time, I thought it all that wasn't important, and let my roommate move in first. This would later lead to a conflict, no doubt, because he chose the bed farthest from the door. Personally, I did not like having passers-by (often loud passers-by) look in on me while I'm sleeping. My roommate, however, was not going to let me stop him from opening the door to cool off the room. Not a good night, for either of us! So be sure to get to that room first.

For the hour or so it takes to move all your stuff in, you should take at least 30 minutes to sort out non-essentials. Now that you've realized how very small dorm rooms are, you'll likely have WAY too many items crammed into that small space. Remember, once you learn your school's layout, you can purchase extra supplies later.

Once the flurry of parents unloading dorm gear clears away, things will quiet down as the reality sets in. During this period, play your favorite music and LEAVE YOUR DOOR OPEN. Make sure people can hear it down the hall. You're almost guaranteed to attract someone in the hall with your music, so you immediately have a shared interest (a fast friend). Most of the folks you meet in those first few hours will form the core of your support group this first semester. Some might even become lifelong friends. If you're the shy type, DON'T miss this opportunity.

By now, you've probably met the RA, or Residential Advisor. You might think that s/he's the hall gestapo, but you'll soon learn s/he's more like the hall ombudsman. They'll probably be a slew of activities for freshman...make "brain like sponge" and attend them all, soaking it all in. Because you've read this site, however, it'll be review!

Don't be afraid to spend some more time with your family before they leave. Everyone is so caught up in the whole experience, nobody cares if you look like a lady's man or momma's boy. You probably won't see them again for several months, so make this last day count. You'll have a whole two semesters to live away from them, so give them a good memory!

Finally, avoid any drinking your first night. I'm sure this will scare many parents, but most move-in days have many a party where the kegs flow freely. While your new-found friends might say that this is the only time you'll have free, so live it up, avoid temptation. First, your time is better spent getting to know people instead of getting hammered with them (you won't remember anything you learn). Secondly, odds are you'll make it a habit that WILL bite you in the butt when you hit your first exam. At least TRY to start off on the right foot!

Most likely you will be too tired from all those activities and heavy lifting to do much that night, so you'll find it easy to fall asleep. The old adage, "Early to bed and early to rise makes a man healthy, wealthy, and wise," could not be truer when it comes to college. If you stay up late during the first few days, it could take weeks for your body to adjust back to an academic schedule. You can get a good night's sleep knowing you've finished the first day of your college life!