Elisabeth Martin, Campus Carrier Features Editor
Jamison Guice, Campus Carrier Asst. Features Editor
Tips for Investing
Read as much as you can. Reading good investing books and articles will help you decide what routes to take, what makes a good investment, and learn all of the terms associated with investing. “The Intelligent Investor” by Benjamin Graham is a good place to start.
• Before investing in a stock, look into the current trends. Have sells decreased or increased for the particular company? Are there any recent studies that have looked into the public’s interest to project future sells? Do not rely on speculation or gut feelings.
• Pay off your high-interest debts first. If you have debt that you are paying high interest on, you may want to pay it off first. For example, if you have a credit card with a balance of $1,000 that you pay 20 percent interest on, you might not want to tie up your money in investments when you might not get returns. It may be better to pay off your existing debt.
• Choose how you want to start investing. This could be through an investment account with a broker, directly through a company, or through a mobile app, among other methods. Weigh the advantages and disadvantages of stocks, bonds, or ETFs and decide which method you are most comfortable with. Start your investments small while you get the hang of it!
• Diversify your investments. Simply put, don’t put all of your eggs in one basket. You should be investing in a lot of different things so that if something goes wrong, you still have plenty of money elsewhere.
• Start as soon as you can. The more time you have, the more time your interest spends earning you money. Also, as the stock market rises and falls, you have more time to learn how it all works if you start early!
Source: USA Today
Quentin McTeer, president of the Berry Investing Group (BIG), leads a team of 15 to 20 students that manage a $315,000 investment portfolio. The students are taught about current events in the stock market and politics to help predict the expected trends of stock prices.
McTeer said that investing in the stock market allows a person to gain money from a passive income.
“You can go to sleep and your money is earning money,” McTeer said. “It is so important to not just rely on the income you have from your job, but to have a second way to get income without actually having to spend a lot of time with it.”
In BIG, students invest in individual stocks and companies. The goal is for students to become familiar with what makes the company a good investment, such as evaluating risks by considering future trends.
For example, McTeer said that cigarette sales are declining because of Food and Drug Administration campaigns to prevent smoking. For this reason, he said that it would not be a good investment. However, a medical marijuana company contains better prospects because of marijuana legalization in many states.
“Even though the industry is still starting to take off, in the future, we are looking at what the potential could be,” McTeer said.
However, McTeer said that one common mistake students make is investing in a big-brand company because the person likes its product. He said that this is a poor assessment of potential profit because it relies heavily on speculation.
McTeer said that for students interested in investing, an ETF, or an exchange-traded fund, would be a good place to start. An ETF allows a person to track the entire stock market and buy multiple stocks at once. One of the benefits of an ETF is that it allows a diversified investment portfolio. For example, he said that if a person bought at least one of every stock available and one failed, there are others that can still earn money.
“If you were to just buy one stock, it could decline a lot in value,” he said. “But if you buy an ETF, that ETF has every single stock. So, if a couple of them fail that’s okay because others are doing great.”
He said that instead of a hiring a financial advisor, which can be expensive, students can use an app called RobinHood that allows a person to sell any stock, bond or ETF. This app provides people with a low-cost entry point into the market because it has minimal fees and free exchange-trading for stocks.
While some may opt for a bank savings account, McTeer said that relying solely on one for the future does not guarantee growth. This is because inflation is at two percent while a bank savings account may only allow money to increase by a fraction of that percentage. As a result, the account holder is losing money because the account is not able to fight inflation rates.
McTeer said that to combat underfunded government programs such as Social Security, a person must save around $2.5 million to $5 million to have a financially secure retirement. So, investing is one way to safeguard for the future.
He said a younger person is able to earn back money lost in the stock market because they still have decades of work left. However, at an older age, a decline in the market could drastically impact a person’s retirement fund. McTeer said that, in the future, another option is to invest in bonds because they provide more security since they are bought from the government.
“People don’t understand what investment education is important for,” he said. “It is for people to take control of their own investments and their own retirement. So, when they do retire, they will have the money to live a comfortable last 25 years of their life.”