My college student wants to start investing. Should he use an app?


Q. My college student is interested in investing. He wants to trade stocks, not buy and hold mutual funds. There are apparently some apps that let you do this. He will be earning money from a summer job but I thought he would save that money for spending money for when he eventually gets to college. What do you think?
— Dad

A. Congrats on your student’s college career and that he’s planning to work.

When it comes to planning for the money he earns, there’s a lot to consider.

First, investing in stocks can be educational and potentially lucrative, but it also brings with it significant risks, said Michael Green, a certified financial planner with GYL Financial Synergies in Parsippany.

Before he dives into buying stocks, you should encourage him to learn about investing, Green said.

“Understanding basic investment concepts, such as risk management, diversification and fundamental analysis, can help him make informed decisions,” Green said, noting there are a number of online resources, courses and books that provide a solid foundation in investing.

Also, he said, if you have a financial planner, you can ask them to speak with your college student and provide basic education.

Next, discuss your college student’s financial goals, Green said, such as whether they’re looking to grow their wealth over the long term if they have short-term financial objectives.

Understanding their goals will help determine the appropriate investment strategy, he said.

After that, your college student should assess his risk tolerance.

“Stock trading involves inherent risks, including the potential for losses,” he said. “Some individuals may be comfortable with higher-risk investments, while others may prefer a more conservative approach.”

It’s important to invest within one’s risk tolerance to avoid undue stress or financial hardship, he said.

Plus, it’s generally a good idea to prioritize building an emergency fund and covering essential expenses before investing in stocks, Green said.

“Encourage your college student to save a portion of their summer job earnings as an emergency fund or for future college expenses,” he said. “Then, discuss the different types of investment accounts available, such as individual brokerage accounts or tax-advantaged retirement accounts like IRAs.”

Each has its own benefits, drawbacks and limitations, Green said, so understanding these options will help your college student make informed decisions about where to invest.

You noted he’s interested in an app.

Green said there are various apps and platforms that offer commission-free or low-cost stock trading.

“These platforms often provide user-friendly interfaces, real-time market data and educational resources,” he said. “However, it’s important to review each platform’s features, fees, and security measures before choosing one.”

You should emphasize the importance of diversification, Green said.

Investing in a single stock or a few stocks can be risky, as the performance of a single company can greatly impact the investment’s outcome, he said.

“Encourage your college student to consider diversifying their portfolio by investing in a mix of different stocks or exchange-traded funds (ETFs) that represent various industries or asset classes,” he said. “Overall, it’s crucial to approach investing with careful consideration and a focus on education.”

By helping your college student develop a solid understanding of investing principles and encouraging responsible financial habits, you can support their long-term financial well-being, he said.

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This story was originally published on May 30, 2023. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.