Legendary investor Peter Lynch is famous for saying, “know what you own, and why you own it.” He also says that you should be able to explain the business model of stocks you own to a fifth grader.
Investing while in college is one of the smartest things a student can do if they have the means to start an investment account.
College students have time on their side. And while they may not have a lot of discretionary income to invest, even starting small can pay off huge over time.
Here are three stocks that are perfect for investing while in college, stocks with simple business models that are stable and easy to understand.
Apple (Nasdaq: AAPL)
Apple is a tremendous investment opportunity for college students. For starters, many college students use at least one Apple device. And if they study anything related to creating media, they probably use Apple computers in school computer labs and will continue to use them when they begin their careers.
When I was in school Apple was a growth story. Today it is an income story.
Sure, there’s still tremendous opportunity for growth. But the company pays nearly 2% in dividends and is sitting on a huge cash pile. Much more importantly, it generates such an incredible amount of cash flow that the cash pile continues to grow despite Apple’s aggressive new dividend and share buyback policies, as well as heavy research and development spending.
It is a stock to hold for the long term.
ExxonMobil (NYSE: XOM)
With time on their side, college students don’t have to risk it all while trying to hit investment ‘home runs.’ Doubles and singles work just fine when you’re harnessing the power of compound growth.
There’s no better way to benefit from compound growth than with an investment in ExxonMobil. The oil & gas company is one of the best known brands in the world.
Besides gas stations and refining, the company sells its petrochemicals to a whole host of industries, from big-agriculture to industrial chemicals and plastics.
The future remains bright for ExxonMobil as it invests in alternative fuels and natural gas. Paying nearly 3% in dividends, ExxonMobil is a ‘forever stock,’ the kind of stock that you buy and hold forever.
Sysco (NYSE: SYY)
Though college students rarely interact with the brand itself, they use Sysco’s products every single day. As the world’s largest “main-line” food distributor, it has customers in all around the world in public schools, hotels, restaurants, college food service, prisons, etc.
From the burger joint down the street to fine dining establishments, there are few restaurants that don’t use Sysco products. Even a lot of farm-to-table establishments use gloves, spices, plastic ware and other Sysco products in their kitchens.
If there’s one thing that all college students do it is ‘eat.’
Sysco isn’t an exciting company but it is very stable, and often these kinds of companies make for the best investments. Schools can cut salaries and raise tuition but they can’t stop serving food. People always have to eat.
The company pays a 3% dividend, so it pays you to wait while compound growth makes your investment grow more and more over time.
As with the other two stocks above, I highly recommend owning Sysco in an account with dividends reinvested, often called a DRiP or Dividend Reinvestment Plan. A lot of fortunes have been made slowly and consistently with stocks like the ones above. It doesn’t take a lot of money to make a big impact down the road. All it takes is patience and an early start.
Time is on your side. If you have the means, investing while in college could prove to be as smart as going to college in the first place.
DISCLOSURE: I personally own shares of Apple.
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