Use extra cash to invest in your future

Students could do themselves a favor later in life if they started saving now. (AP Photo)

Matt Erikson

College students are notoriously broke, so it’s no wonder that they seldom think about investing — myself included.   The last time I was home, however, my point of view on this topic changed dramatically.

My grandfather told me the story of how he invested his entire savings of just $330 in two shares of AT&T stock not long after the stock market crash.

He grew up in a small mining town where his family lived in a shack next to the train tracks in Shantytown, Ohio. His father, my great-grandfather, died working as a miner and the rest of his family was forced to join the traveling circus to stay afloat. As a young adult he enlisted to serve in World War II, and then moved to northern New Jersey where he made a very modest living doing maintenance work for the local high school.

Like most of us in college, he was certainly not rich, and the decision to invest his entire savings was not an easy one.

To grow his portfolio, my grandfather could only afford to study the market and reinvest the dividends he received from the original AT&T stock. He never invested another cent of his own money, and over time he grew those two shares into a portfolio of 25 different companies.

This initial $330 investment, not his pension, has since funded his whole retirement, paid for a large part of his grandchildren’s college education and has been gifted to his children to help them pay for their first homes.

And it just keeps growing.

He told me the secret to his success: “I advise anybody that wants to get into it to invest a small amount early on, and let it grow.”

As you grow, spread out your investments to multiple companies so that all of your eggs aren’t in one basket.

He admitted that the way AT&T’s stock split allowed him to get very lucky early on, but he said that same thing could realistically happen to many stocks at any point in time. The key is doing some research before making a purchase.

This conversation with my grandfather convinced me that people our age could be much better off as adults if they just had a little bit of foresight today. Most people don’t start to seriously invest until their 30s, when they already have a family and every penny counts.

But if you invest when you’re 20 years old, your stock has 10 years to grow by the time you’re probably getting ready to buy a home.

Why not save up some money from your summer job, do some research and invest a small amount? The worst-case scenario is that you lose a couple hundred bucks that you probably would have wasted on pizza anyway. Even if you somehow lost everything, it’s still cheaper than four credits in Finance and you’ll probably learn way more.

The best-case scenario is that you create an amazing asset that lasts you the rest of your life and changes the entire course of your family’s history.