Investing isn’t just for your parents – it could be the solution to an after-college life full of debt.

With tuition and living expenses continuing to rise, William Cahill, ISU professor of finance and accountant for the Controller’s Department

, explained how valuable youth and planning can be.

“Starting to invest at an early age is a smart move,” Cahill said. “When I turned 21 and graduated from college I began buying CDs from a bank at a 15 percent rate. From there, I went on to mutual funds, and by the time I was 30, I had a broker.”

Although the idea of putting money away for the future may seem odd at a time when most students are more concerned with balancing classes and managing their social lives, Cahill said it can be relatively easy to do.

“I don’t know if investing is something that I want to start while I’m in school,” said Adam Jessen, freshman in interdisciplinary studies. “I just don’t understand the whole process with the stock market and everything.”

Individual stocks, however, are not generally the best pick when starting out. There are low-cost options that can often yield greater returns.

“The stock market is not a good place to invest next semester’s tuition, [but] stocks can be good investments for recent graduates who have already established a cash reserve for emergency expenses,” Cahill said.

One of the best investments for a college-aged student to try is an index mutual fund.

“Anyone can get an [index mutual fund] by simply sending in a check to a financial institution, and what is great about them is that there’s relatively no research needed to begin – unlike the stock market,” Cahill said.

An index mutual fund is an investment from the market’s indexes – the Dow, S&P 500 and Nasdaq 100 – that follows the trend of the market instead of trying to beat it. This results in a lower fee than the MBA-totting analysts of mutual funds will charge.

“Index mutual funds have lower annual expenses and are more tax-efficient than actively managed mutual funds,” Cahill said. “They also perform better over the long run than actively managed mutual funds.”

In an example of the importance of starting early, Cahill stressed how important the next eight years of a student’s life can be in planning for the future.

“Assuming a steady 10 percent return, a 19-year old who invests $2,000 a year for each of the next eight years and then stops investing will be worth more at age 65 than a 19-year old classmate who invests nothing for the next eight years and then invests $2,000 a year for each of the next 38 years,” Cahill said, explaining the importance of starting early.

“In other words, the first 19-year old who started early and invested only $16,000 will be worth more than the 19-year old who started late and invested $76,000.”

Although some students may not be able to afford $16,000 during the next eight years, an investment of even $500 a year is a step forward.

“I’m so broke right now that the only thing I want to invest in is food,” said Tuan Huy Van Tran, senior in sociology. “But I think that I want to get into it eventually for my future.”

The onset of college loans may be daunting, but Cahill said after graduation, students need to live below their means for a few years to get out of debt and have enough cash available for investing. He said it is not easy to do, but those who follow that advice probably will have a much higher standard of living later on.

There are some misconceptions about investing that students should be quick to dismiss.

“One of the common myths in the investing world is that to be successful, a person must pay a high fee for a special service or broker, but that is not the case,” Cahill said.