What’s it worth to you? Student Investment 101

As we go into the New Year, financial gurus around the world are publishing their investment advice for 2014. Some- thing rarely covered however, is the student investment. What can you actually do with your money, be- sides buying rounds in the Copper Rooms? The antithesis of student budgeting, student investment is almost unheard of. Wait! Don’t stop reading. You don’t have to have £££ in your account – even if you are strapped for cash this term, you should still make sure you have the best bank account out there. Oh, you had to pay for your railcard this year? Rookie.

Make sure you get a good broker!

Student Current Accounts

This is your bread & butter stuff. Most of you will have a student current account. These aren’t really considered investment havens, but you may be interested in some of the features provided for students at different banks. In addition to differences in overdraft facilities, different banks may offer freebies to their student account holders! Take a look around; you may just bag yourself a railcard, shopping discounts or even trips to the zoo.

Individual Savings Accounts

Alternatively, you could look at putting a little money in an Individual Savings Account. These ISAs are just like any normal savings account, except you don’t pay tax on the interest you earn. Now, the wise amongst you will think, hang on, why don’t I just put all my savings in these ISAs? A figurative mid- dle finger to the taxman. Well, I’m afraid it’s not that simple. Unfortunately, ISAs have an allowance; each year you are able to deposit a certain sum into your account. For 2013/2014, this allowance was £5,760. Also, if you withdraw money, this allowance is not topped up so, if you do choose to put some money in an ISA, make sure you won’t be needing it by week 7!

National Savings & Investments

Alternatively, you could invest with state-owned NS&I, the National Savings & Investments Bank. The NS&I institution offers a range of savings & investment opportu- nities to suit everyone… appar- ently. And, as it is backed by HM Treasury, you are pretty free of risk. The NS&I Bank have all of their in- vestments listed online & are very accessible. Take a look and see if there is something of interest. One such investment they have is ‘premium bonds’ giving you the chance to win a £1m jackpot every month. Cool, eh?

Stocks

Every once in a while, you will come across a student who proclaims to have a fabulous portfolio of stocks & bonds. Chances are, they don’t. Investing in stocks can be costly, particularly for students. If you do have a bit of cash and a few companies you like, take a look at opening a share dealing account. There are a plethora of brokerage firms out there who facilitate the buying of shares, but even most banks have similar features. Just make sure you watch out for the fees; some brokerage firms charge a fixed amount for each trade, but some also have a monthly cost. There’s no point doing it if these fees are too high relative to the amont you invest. Just make sure you choose the right broker. Natwest for instance have a share dealing account with a flat rate of £13.95 per trade on UK equities, and £20.00 on international stocks.

Mutual Funds

Some people like the idea of investing in stocks, but have neither the time nor the patience to pick individual investments. Equity funds are a nice alterative for these people. Equity funds are pre-made portfolios of stocks that have been picked by the professional. They usually have certain defining characteristics such as geographical locality. They provide immediate access to a portfolio of stocks, without you needing to worry about the logistics. The most common funds are known as open-end or mutual funds. When you buy into a mutual fund, you pay the net asset value to the fund itself, and benefit if the portfolio performs well. You may have to pay a small fee to compensate the fund manager for their troubles, but mutual funds provide a nice little introduction to the world of investment. Weekend copies of the FT are always littered with fund advertisements and investor tips on which funds are to perform well; take a look to see if there are any you like the look of.

There you have it, a very brief overview of some of the options available to you. As with anything, it is of paramount importance that you do you research. If you don’t understand what you’re investing in, you might as well just get the drinks in. Mind you, I do enjoy Jack Daniels.