Where to invest 10k as a broke college student
Hello all, I am writing this to seek some amateur investment advice. I am a rising junior and I am on track to make around 10k this summer from my internship. In the past I have dabbled in equity derivatives, more specifically, options. I know the high-risk associated with it, but I have been self-teaching myself the past couple months and feel like I have made some good progress. Is it a bad idea to throw all 10k into my portfolio and purely trade options? I don’t have much money as I am still in college, and being able to make some passive income (even if it’s $100 a week) is something worth going for. Are any of you able to give me some insight into what I should do. I have also been thinking ditching the options idea, and just about throwing it all into a couple ETF’s and use it as the first step in saving for financial freedom. Any help is appreciated.
Using all of your money to trade options is a really bad idea. Take the low fee ETF path
Any recommendations aside from generic SPY/VOO…
VOO is your best bet
VanEck's SMH - if you still have faith in the semiconductor rally.
TQQQ if you want to "spice things up" - but historically the market does terrible in the upcoming months
just put it in a 5%+ money market and call it a day
then you can mess around with a few hundred $ in options
Do some research on sector or industry ETFs you might be interested in. Also don’t take investment advice from random people on the internet
I’d honestly use that money to pay off student loans rather than investing
Free 5.5% with this link. Essentially a High Yield Savings Account, I'm making a similar amount this summer and I'm putting everything in this due to short term fluctuations especially with a "big sell off" occurring in s&p500 rn and rotation into smaller caps, election year, interest rate cuts (already priced into stock prices leading me to think when they do lower rates, people will book profits. "buy the rumor, sell the news type." Here's the link, good luck: https://www.wealthfront.com/invited/AFFD-WUEI-2Z67-6WUA
Also & maybe most importantly, it's FDIC insured, so dw about it being sketchy, etc.
No such thing as a free lunch. What’s the catch?
nothing - it's a high yield checking account, similar to a high yield savings account but you have more mobility with your money. provided you the link, check it out!
Uhh ya sure I guess trade options if you want to learn a lesson as to how ruthless the market is and why risk-weighted upside is a lie when your downside is you get wiped out. Otherwise I’d throw it into ETFs like others have mentioned and let it ride.
But also, just to be clear, you said you would be ok with a little yield and said $100 a week. So with your $10k investment, you want a $5,200 annual yield? If you generate an annualized CASH yield of 50%+ in a single quarter then you should bottle that up and sell it. If you can consistently generate that type of yield for a couple years I’ll give you a million dollars to manage with a fat incentive fee.
hahahahaha deal
Best use of time would be to save most of it, maybe trade a fraction of it to learn some market lessons, and work on being a good student and finding a good job.
It will be good to learn some market lessons with a small amount but if it comes at the expense of gainful employment following college then it’s not worth it.
As a "broke college student" why don't you use some of the money to pay for your college expenses like rent, food, etc.?
i have on-campus housing which comes with a meal plan, so in that sense, all my basic needs are accommodated for.
There is a big difference between investing large amounts of money and small amounts, especially if those small amounts represent a large portion of your net worth.
If you took your $10k and invested in the market and got a 7% return, you're just earning a risky $700. You might get a higher return by buying a car that enables you to get a job off campus and make more money than you otherwise would have. Or maybe you can use a portion on your wardrobe, helping you feel more confident and look more competent during your next internship (increasing chances of a return offer). Or maybe you make tactical investments- when I was in high school I got to be pretty familiar with the market place for certain musical instruments and saw various deals pop up where people sold their instruments well below value. Profiting $700 in a year would have been a breeze.
Another thought is that this money might be the seed money for a house downpayment- owning a home lets you forgo rent, capture home appreciation, etc. $10k is a meaningful portion of a downpayment for a starter home. Likely better to put that money in a HYSA until you need it rather than risk it on the market for a few years.
I get that on paper the SP500 will win in the long run, but think about it this way- your hurdle rate is the few hundred bucks of difference between a HYSA and the market. There are likely things that you can pursue with your money that will lead to more value. Not hard to find 50 and 100% IRR plays when you're only talking about earning a few hundred dollars.
Later on, when you are making a full salary, have a car, have the wardrobe you need, and don't have the time for pursuing a few hundred dollar arbitrage deals, that's when it makes sense to pour money into the market.
Your mind is in the right place- looking for ways to grow your money. I'm just saying to look broader.
EDIT: The simplest, most finance-y way to put it is when you're talking low dollar amounts, you probably have better CapEx opportunities than you do equity investment opportunities.
thank you so much for the advice, it means a lot. most of my temptations to get into the “high-risk” side of the market come from thinking i’d be able to achieve a 50% or even 100% IRR in as little as 6 months. as i mentioned, i have dabbled with options in the past (as a complete beginner). i managed to make a couple 30-60% IRR trades by full-porting with no type sense for risk-management, but of course, through more poor choices it came crashing down. i feel as if i am much more educated this time around, and i feel as i truly can be profitable. albeit, it won’t be huge returns on each trade, but enough to grow at a consistent rate. am i being hopeful/greedy? should i truly stray away from short-term lust and save it all?
To be clear, when I say it's easy to find 50 and 100% IRR investments when you're talking small dollars, I mean it's easy to find an item on FB marketplace for $200 that is actually worth $400. Do a few of those and you've beat the 7% returns from stock market for your entire $10k.
When it comes to the type of trading that you're talking about, I'd say there is some value to putting skin in the game and learning how these trades work, learning technical analysis, valuations, etc. Nothing drives you to learn more than having your own money on the line. But frankly I'd just do this with $1-2k. You're highly unlikely make repeated, meaningful gains, so the real payoff is the learning and you can do that without risking your entire $10k.
I’m 10% allocated to uranium
I invest in short-term gold trading. I think it is better, short time, high return, the key is that the funds will not be trapped
You are NOT broke if you have $10k in savings.
Go spend it on a few trips and fun activities.
You'll never have as much time as you do now.
When I was 15-16 years old I got into options trading because I made a retarded amount of money off the Nikola IPO. I lost 6k in 2 days :( not the most fun I have ever had but it was a valuable lesson and it gave me a story that I tell to people during an interview (usually intended to make them laugh which it does), Like everyone is saying in here please go with a low-cost ETF (SPY, VOO, VTI) or maybe a tech ETF (VGT) if you are feeling froggy.
God Speed
While trading options might seem appealing, it can be very risky, especially for college students. It's not advisable to hold $10,000 in options; instead, it's better to diversify your investments into ETFs. ETFs offer a more stable opportunity for growth and income, allowing you to explore investment strategies with a smaller amount of capital. This approach helps you build a strong financial foundation and create a mix of active and passive income sources. Staying rational and cautious will help you avoid significant risks and work towards long-term financial stability.
Other than the generic advice of putting it in the index, might help in putting it into sector specific indexes depending on what’s your view of the market and could allocate like 7% to individual equities based on your own research will help develop some good skills and help you keep up with the markets
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Wso posted the same comment 10 times, pls fix patrick
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