If you’re about to graduate college with a degree in finance or economics, and want a job but have no experience with investing under your belt, you are already behind. Experience is the single most, instrumental tool on the market. We try to get our first job to gain experience, while our employers are looking to hire with it already on our resume. We’re thrown into this vicious cycle that seems impossible to rise above.
I urge you to start investing now. A student myself, I am personally aware of the burdensome student loans, accumulating debt, and full course load. On top of that, we have to squeeze in time for friends, family, maybe a job, and oh yeah, sleep.
Excuses are plenty. I get it. For the first two years of my college career, I created this mentality that it would be impossible to start investing with the little money that I had. These were my thoughts, and this is why I was wrong:
- “Where am I going to find the money to start this?”
For starters, I had to give up my weekly Chipotle burrito. If I had done this as a freshman, and put my burrito money towards Chipotle stock ($CMG), I would be approximately $500 richer today. One share at an entry point of around $100, would now be worth around $611.58 as of 3/20/14.
People overestimate the amount of money needed to start. With just a little bit of money saved, you can begin to learn how the markets work.
- “Are there risks involved?”
There is trading and there is investing. The trading strategy involves the hopes of gaining a couple pennies and scalping the spread. Leave this to seasoned investors. Not only will the SEC restrict day trading activities for smaller accounts, but it is also much riskier for beginners and students like you and I. Instead, I suggest value investing for long-term growth. You MUST start small. As a student, your first priority is to finish school and pursue a career, not put yourself, or your family, in more debt. Using small accounts is necessary to learn how the markets work. Remember, your gains and losses are lessons. Use this period to learn the ins and outs of the marketplace; a textbook will only teach you how to invest in a perfect world, while your experiences will teach you how to profit from your losses.
- “Where do I start?”
I suggest you begin by joining the Student Finance Association and/or the student-led interest group, RUC Investment Banking. Both of these groups will surround you with students and experts whom you can learn much from. Familiarize yourself with the Bloomberg terminals in the Business & Science building. This is a huge resource the school provides for its students. However, if you’re looking to practice your skills with virtual money in a real world market, consider the MarketWatch: University Trading Competition (http://www.marketwatch.com/game/wsj-student-index).
It takes time and patience, but if you’re looking to set yourself apart from the average student while learning about the real world and its markets, investing is for you. Don’t fall into the corrupt mentality that investing is only for Wall Street millionaires. You are young and you are talented, learn from my mistakes. The clock starts now.
For questions, please feel free to contact me at: firstname.lastname@example.org