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Should Students Invest in Financial Market Instruments?

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financial market instrumentsDevelopment of online trading platforms has made it easier for people to participate in the financial market. You can trade in stocks, bonds, currencies and mutual funds by sitting at home. This ease of access together with low capital requirement is drawing new category of investors like students into the financial market. Through this article, we will try to explore the advantages and disadvantages students should keep in mind before taking a plunge in financial market.

Advantages of Participating in Financial Market

Earn while you Learn – Students need pocket money during their studies and for that they depend on parents or part-time job. As part-time job opportunities are very few in India, earning pocket money through financial markets can be a good option. Participating in financial markets can help students learn and earn at the same time.

Learning Time Management skills – If the course is demanding, students do not get enough time for part-time jobs resulting in lost opportunity. This loss can be compensated by utilizing available resources and effective time management. Most of the courses allow use of computers and internet in the class. You can leverage on them to earn extra bucks while attending the class. You just need to have an online account with a broker and internet connection.

Base building for Career in Finance Field – Students planning for long-term career in the field of finance should definitely participate in financial market. Financial knowledge acquired in this process will surely help them score better over peers in interviews.

Disadvantages of participating in financial market

Loss of Focus from Studies – A lot of knowledge and research is required to be successful in the financial market. Trading is not an easy task and it’s highly probable that students will lose focus from studies in the process. Sometimes, trading in financial securities reaches to the level of addiction and one must learn how to strike balance between trading and education.

Risk Element – Trading in financial securities is a risky business. People lose money more often than they earn it while trading. Keep in mind, just participating in financial market will not make you earn money. With the limited capital you have, you fall in higher risk category as you might lose entire capital in no time.

Before you start

Learn the basics – Before you start in financial market, take help of a professional to learn the basics of the game. The one who has done the home work has lesser chances of failure. It’s recommended to read good books and start with paper trading or virtual trading first.

Be conservative in your trades – As a beginner, you should focus on earning pocket money and not making a fortune. There is difference between dream and reality. In real world, one makes limited profit with limited capital. As a student, you have limited capital and preserving that should be your prime focus.

Eligibility Criteria – You should check on the Government guidelines (especially the age criteria) before you take the plunge. It’s mandatory to fulfil the eligibility criteria before you participate in financial market.

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