Why Students Hesitate in Investing—and Why They Should Start Early
- sina moeini
- Sep 1
- 5 min read
Updated: Sep 21
Investing is one of the most powerful tools for building long-term wealth. Yet, many students hesitate to take their first step into the world of investing, despite being at the perfect stage of life to leverage one of the strongest forces in finance: time. While older investors scramble to catch up, students have decades ahead of them to benefit from compounding returns, even if they start with small amounts.
But hesitation is natural. For students, several concerns stand in the way of making that first investment: risk management, lifestyle choices, limited money, and lack of knowledge. Understanding these barriers can help students address their fears, weigh the pros and cons, and recognize why beginning early—even with modest amounts—can transform their financial futures.
1. Risk management: fear of losing hard-earned money why risk scares students
Risk is the first and most obvious barrier to investing. Students are just starting to earn and manage money, often through part-time jobs, internships, or parental support. Losing even a small amount can feel overwhelming because financial safety nets are limited at this stage. Unlike established professionals, students don’t always have stable salaries, emergency funds, or large savings accounts.
Additionally, the financial markets can look intimidating from the outside. News about stock market crashes, cryptocurrency volatility, or housing bubbles can amplify the fear that investing is equivalent to gambling.
Pros of being risk-averse
Protection from impulsive losses: Avoiding investments in high-risk assets like speculative stocks or crypto prevents catastrophic losses.
Focus on essentials: By not risking money, students can prioritize tuition, rent, and food security.
Cons of being risk-averse
Missed opportunities: By avoiding investment entirely, students miss out on compounding returns that could multiply even small sums over decades.
Inflation risk: Keeping money in cash means its value erodes over time as prices rise.
The balanced view
Risk can never be eliminated, but it can be managed. Diversification, starting small, and focusing on long-term growth instead of short-term speculation can help students find the balance between safety and growth.
2. Student lifestyle: short-term needs vs. long-term goals
Why lifestyle matters
Student life is often financially tight. Rent, tuition, textbooks, and social activities compete for limited funds. Many students feel that they simply don’t have room in their budgets to set money aside for investing. On top of this, students tend to prioritize short-term enjoyment and experiences-travel, eating out, entertainment-over distant future goals like retirement.
Pros of spending now
Quality of life: Enjoying social activities and experiences can reduce stress and make student life fulfilling.
Networking and opportunities: Spending on events, clubs, or travel can lead to professional and social opportunities.
Cons of spending now
Lack of financial foundation: Spending everything now leaves students with nothing to build on later.
Missed time advantage: Every dollar not invested during youth is a dollar that misses out on decades of compounding.
The Balanced view
Lifestyle and investing don’t need to be mutually exclusive. Even small, consistent contributions—such as $20 or $50 a month—can grow substantially over decades while still allowing students to enjoy their current lifestyles.
3. Having enough money: The myth of “I Need to Be Rich to Invest”
Why money is a barrier
A widespread misconception is that investing requires large sums of money. Many students believe they must wait until after graduation, when they have higher-paying jobs, before they can start. In reality, modern investing platforms make it possible to begin with as little as $1 or $10.
Pros of waiting to accumulate wealth
Financial security: Students can focus on paying off debt or building an emergency fund before risking money in markets.
Larger investment capacity later: A stable income after graduation allows for larger contributions.
Cons of Waiting
Lost compounding years: Even small sums invested during student years can grow dramatically. For example, $50 a month invested at a 7% annual return starting at age 20 grows to about $118,000 by age 50. If the same investment begins at age 30, the total is only around $56,000.
Delayed financial literacy: By waiting, students postpone the learning curve of managing investments, which is best started early with low stakes.
The Balanced view
Students don’t need to wait for wealth to begin investing. Even pocket-change investing builds the habit, provides exposure to markets, and unlocks the benefits of compounding.
4. Adequate knowledge: the education gap
Why knowledge holds students back
Many students hesitate because they feel they don’t understand investing well enough. Financial literacy isn’t always taught in schools, and students may fear making mistakes without expert guidance. Terms like “mutual funds,” “ETFs,” or “dividends” can sound confusing or overwhelming.
Pros of waiting to learn More
Avoiding costly mistakes: Jumping into investments without knowledge can lead to poor decisions, such as panic-selling during downturns.
Building confidence first: A solid foundation in financial literacy can make students more comfortable taking the leap later.
Cons of Waiting
Paralysis by analysis: Waiting until you know everything means you may never start. Investing is a lifelong learning process.
Missed early experience: Some lessons can only be learned through practice, and small mistakes made early can provide valuable insights.
The Balanced View
Students don’t need to master finance before starting. Beginning with simple, diversified options like index funds or robo-advisors allows them to gain hands-on experience while learning.
5. Why students should invest early: compounding and time
All the barriers—risk, lifestyle, money, and knowledge—are real, but they shouldn’t overshadow the biggest advantage students have: time.
Compounding is the process where returns generate additional returns over time. The earlier you start, the more time your money has to grow exponentially. For example:
If a student invests $100 a month starting at age 20, with an average return of 7%, they could have over $240,000 by age 50.
If they wait until age 30 to start, that same $100 monthly contribution grows to only about $118,000 by age 50.
The ten-year head start doubles the outcome—even though the total invested amount is the same.
This demonstrates why starting early, even with small contributions, is the smartest move a student can make.
6. Introducing Wealthsimple: A Student-Friendly Platform
One of the biggest breakthroughs for modern students is the accessibility of investment platforms tailored to beginners. Wealthsimple, a Canadian-based investment platform, is an excellent example of how investing has been simplified for younger generations.
Benefits of Wealthsimple for Students
Low barriers to entry: You can start investing with as little as $1, removing the excuse of not having enough money.
Robo-advisors for beginners: Wealthsimple Invest automatically builds and manages a diversified portfolio for you, based on your goals and risk tolerance. No advanced knowledge is required.
Wealthsimple trade for self-directed Investors: If students want to pick their own stocks or ETFs, they can do so commission-free through the Trade app.
Fractional shares: Students can invest in expensive companies like Apple or Tesla with just a few dollars, making diversification more achievable.
Education and resources: Wealthsimple offers easy-to-understand educational materials, perfect for students who want to build knowledge while they invest.
Socially responsible options: For students conscious of sustainability, Wealthsimple offers portfolios that focus on socially responsible and low-carbon companies.
Automated contributions: Students can set up recurring deposits—even small ones—to build the habit of consistent investing.
Conclusion: Turning hesitation into action
It’s understandable that students hesitate to invest. Risk, lifestyle priorities, limited funds, and lack of knowledge are real challenges. However, the pros of starting early far outweigh the cons. Students don’t need large sums or advanced knowledge to begin. By starting small, managing risk responsibly, and leveraging beginner-friendly platforms like Wealthsimple, students can build lifelong financial habits and take advantage of decades of compounding growth.
Investing isn’t about getting rich overnight—it’s about planting seeds today that grow into financial security tomorrow. For students, the best time to start is now.
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Begin with very small amounts, even just $1–$20, instead of waiting until you’ve saved a lot.
Use beginner-friendly apps like Wealthsimple Invest that automatically build a diversified portfolio for you.
Buy fractional shares through Wealthsimple Trade so you can own part of big companies without needing a large budget.
Make investing a routine by setting up automatic monthly contributions, even if it’s only $20.
Keep learning as you go by using the platform’s educational tools, rather than waiting until you feel fully ready.
"This article really resonates. As students, it’s easy to delay investing because money feels tight and the risks seem scary. But the reminder that even small amounts can grow significantly over time through compounding is powerful. Investing early isn’t about being rich—it’s about building good habits, learning along the way, and using time as our biggest advantage.
What also stood out to me is the point about balance—students don’t need to give up their lifestyle completely, but setting aside even $20–$50 a month can make a difference. Modern tools like robo-advisors and fractional shares make it much easier to get started. Mistakes will happen, but making them early teaches valuable lessons without huge losses. Ultimately, starting now means building both…
I feel most connected to the pursuit of knowledge. While my current understanding of financial terminology and strategies is limited as a student, I believe that consistent learning can build both competence and confidence over time.
Starting early is key to long-term wealth accumulation. For example, investing just $100 per month from age 20 can grow to approximately $240,000 by age 50, compared to only $118,000 if you begin at age 30.
Begin with small, manageable contributions—such as $10 to $25 per month. Consider starting with simple ETFs or index funds, and use beginner-friendly platforms like Wealthsimple. As you continue investing consistently
1 I connect most with knowledge. My limited understanding of financial terminology and tactics as a student makes me apprehensive, yet constant studying can boost self-assurance.
2 Wealth may build on itself if you start early. For instance, if you start investing $100 a month at age 20, you can reach $240,000 by the age of 50, as opposed to $118,000 if you start at age 30.
3 Start with little sums, such as $10 to $25 every month. Choose simple ETFs or index funds, use beginner-friendly applications like Wealthsimple, and continue learning as you make consistent investments over time.
1 . I relate most to knowledge. As a student, limited understanding of investing terms and strategies makes me hesitant, but learning continually can build confidence.
2.Starting early allows money to grow on itself. For example, investing $100 monthly from age 20 can reach $240,000 by 50, compared to $118,000 if starting at 30.
3.Begin with small amounts, like $10–$25 monthly. Use beginner-friendly apps such as Wealthsimple, choose simple ETFs or index funds, and keep learning while consistently investing over time.