Most students are wary of risking their money, so investing in stock may seem complicated and intimidating, but buying stock in 2020 could be simpler than many think.
Some college students, including members of the California Baptist University Investment Group, are already investing in the stock market with great success.
The club experiences a 9 percent annual return on investments, which is 2 percent above the national average.
“It doesn’t need to be super complex,” said Jackson Mackliff, junior finance major. “Just read into the company. If it’s something you believe in and those couple numbers are there to back it up, I don’t think it should be daunting for everyone.”
For students beginning their investment journey, Dr. Adele Harrison, professor of finance and the investment group’s faculty adviser, likened buying stock to using a savings account.
“It’s like a forced savings,” Harrison said. “It’s just forcing your savings into a riskier investment.”
However, Harrison said students should make sure they have an already sizable savings account before taking the investment leap to guard against unforeseen expenses.
“If you go into that financial market to sell your shares of stock, you won’t know how much it is going to be worth at any given time,” Harrison said.
Yet for students who are willing to undergo risk, the reward can be great.
While investing in retirement plans like the 401(k) can be expensive and take decades to cultivate, the stock market can be much more profitable.
“If every seven years you’re making an investment (in the stock market), you (cut in half ) your retirement,” said Michael Bailey, senior business administration major. “Starting now, even if it’s (investing) small amounts of money — just going without Starbucks for a couple days—that money turns into a lot more money later in life.”
Students who desire an easier method of testing the market, can use apps such as Robin hood and Acorn.
These apps invest money automatically for the user with services such as an automatic round-up on purchases, immediately investing excess change.
One of the benefits of these apps is the instant diversification of the user’s stock portfolio. This way, no user is completely reliant on one aspect of the market; money is spread among a broader group of industries, making it safer.
“I think that (Robin Hood) is a great way to gain exposure to the way markets work,” said Kyle Sklepko, senior finance major and president of the CBU Investment Group.
However, Sklepko said there are also more advanced methods of investing that can yield better results. One of these methods is the Exchange-Traded Fund (ETF).
An ETF contains many stocks or bonds in one package. This diversifies the owner’s holdings similarly to Robin Hood. An ETF is bought and sold just like stock, but it is less risky than stock.
Sklepko invites anyone who is interested in learning more about investing to join the CBU Investment Group at their weekly meetings on campus Wednesdays from 5–6 p.m. in BUS 212 in the Business Building.