For many of us the only things we are invested in are the shows we binge watch after class. Though for the more business savvy there is a whole other world you can invest in, the stock market, To the outside it may just look like a bunch of scary line graphs and numbers, but if you learn a little about what they mean and how to follow the trends you might be able to make a little money.
With tips from YouTube and from listening to “what my guy friends were doing at the time,” University of Miami junior Lauren Fernandez made her first stock market purchase when she was still in high school. She also checked out online brokers that cater to beginner investors.
“I started investing in Robinhood, which I know is a starter one not really like for advanced people,” said Fernandez, a public health major. “If you’re just starting out, that’s the one.”
Like Warren Buffet, one of the world’s most successful investors, Fernandez and many other young people are not waiting for a degree, a full-time job and a steady paycheck to learn how the stock market works. Buffett was 11 years old when he purchased his first shares of stock.
“The year was 1942, I was 11, and I went all in, investing $114.75 I had begun accumulating at age 6,” Buffett wrote in his annual letter to shareholders in 2019. “What I bought was three shares of Cities Service preferred stock. I had become a capitalist, and it felt good.”
Young investors have the benefit of time, investment advisors say. Robert Farrington, founder of “The College Investor,” a personal finance site for Gen-Zers and millennials, says that a person who starts investing at age 18 has significant advantage over the person who starts investing after college or after entering the job market.
Walter O’Leary, a managing partner at South Pointe Capital LLC and an executive-in-residence at the Miami Herbert Business School at UM, agrees.
“I think especially younger people, who have a longer horizon and perhaps a higher willingness to take on risk, should invest for their future in equities, as opposed to say, somebody who is about to retire and has less willingness to take risk and needs the income for surviving, paying rent and buying food,” O’Leary said.
While precocious investors like Fernandez and Buffett couldn’t wait to get started in the market, others say they don’t think investing is something that they can or should do. According to a 2023 national online survey of undergraduate students conducted by Barnes & Noble College Insights, it is estimated that 40% of 18- to 29-year-olds in the United States invest in the stock market, but only about 14% of college students invest.
“A lot of people are very intimidated by investing because typically, like finance, it is a very male-dominated field, and it feels like there’s no space for people that may not look a certain way or may not come from a certain background,” said Olivia Martinez, a junior chemistry major and a member of ‘Canes Invested. The UM investment club teaches students of color and students from other marginalized communities methods of building wealth.
She said intimidation keeps a lot of people out of the conversation. “That’s part of why this club was even founded so that there is a seat at the table for everyone,” Martinez said.
Other students say they want to be more knowledgeable about the stock market and how it operates.
“Personally, I do not invest because I feel like investing without enough knowledge is, in fact, gambling,” said Zviko Vheriwa, a junior accounting major. “I like to put my money in things that I personally understand, and the stock market is something that I do not understand well enough to risk my savings and hard-earned money.”
That’s where investment apps, websites, stock market games, virtual trading, financial planners and campus investment clubs can help. Determining which stocks are performing well requires analyzing various factors and learning the vocabulary of investing. It is also important to research a company’s financial health, market trends and potential for growth.
Understanding how stocks work can be confusing and seem daunting, but investing should be part of everyone’s financial plans, said Jason D. Damm, an assistant professor of professional practice at Miami Herbert Business School who oversees the Category 5 Student Managed Investment Fund.
“While many people hire professionals to invest for them, in the finance department, we believe our students should know how to manage their finances and understand investing,” Damm said. “We want to encourage them to make their own financial decisions and teach them how to choose investments and manage their finances.”
The group invests as a team. The student-run investment portfolio has more than $1 million in assets under management, providing students with investment management and decision-making experience.
“The decisions on what goes into the portfolio are made collaboratively,” he said. “We have one analyst covering each stock or company and, based on their valuation, we decide as a team whether to invest. This collaborative approach mirrors how most mutual funds, hedge funds and pension funds make investment decisions.”
Carly Litt, a junior finance and marketing major, is one of about 100 undergraduate and graduate students in SMIF. Members, who must take an investment class before joining, can choose to be on the analyst or the portfolio side of investing. On the analyst side, students research companies and decide which ones to add to the investment portfolio. The portfolio students manage the stocks already in the portfolio.
“When I got to Miami, I knew I wanted to study finance, but I didn’t know exactly what I wanted to do in finance,” said Litt, who is a portfolio manager this semester after having done analysis last semester. “So I thought that joining the Student Managed Investment Fund would be a good way to get exposure to the different opportunities within finance, and it has been.”
The campus hosts several other investment clubs, all of which give students a heads-up in stock trading.
“An easy first step for the truly fearful is to open a high-yield savings account,” Martinez said.
“When we think of investing our first thought goes to the stock market but there’s a lot of other ways that you can invest,” she said. “A high-yield savings account is usually where we tell students to begin because it’s lower risk than the stock market is and really easy way to multiply your money.”
O’Leary, however, says stocks outperform money market rates that banks offer on a savings account.
“In fact, many studies have shown that equities can actually double in value over a period of eight or nine years during a normal cycle,” O’Leary said.
Investment sites advise the new investor to start out small, even with $20 to $30 a month. While specific investment amounts are subjective, it’s crucial for individuals to invest only what they can afford to lose.
In a 2022 video for CNBC’s “College Voices” series, personal finance expert Suze Orman advises students to adopt an investment technique called dollar cost averaging, where a certain sum of money is invested every month. She recommends putting money into a Standard & Poors 500 Index Fund and continuing the process “until you are old and gray.”
U-INVE$T
Dating back to at least the 1940s, college investment clubs help students learn the ins and outs of share trading. Here are some investment organizations at the U:
1. Alpha Kappa Psi – Mu Tau Chapter: While not solely focused on investments, this professional business fraternity offers networking opportunities and events related to finance and investing.
Faculty Adviser: Dahlia Zohar, Student Organization Contact: Mitch Breen, Typical Recruitment Period: Fall & Spring, Instagram Handle: @UMAkpsi
2. Alternative Investments Club — AIC — is a student-led organization dedicated to educating its members about alternative investment strategies. AIC’s mission is to provide a platform for students to learn and discuss alternative assets and provides direct exposure to well-respected investors across private equity, hedge funds, real assets, private credit and venture capital.
Faculty Adviser: Dolores de Goytisolo, Student Organization Contact: Kyle Pearson
3. Canes Finance Association seeks to provide and amplify basic and advanced knowledge of financial-related topics to its members while also fostering intellectual and career development initiatives. The organization also promotes financial literacy across campus, builds long-lasting relationships with members and established financial experts, as well as helps construct a strong supportive community of young professionals. Students from all schools and colleges are welcome.
Faculty Adviser: Mario Perez, Student Organization Contact: Ananya Malhotra, Typical Recruitment Period: Open to All, Instagram Handle: @canesfinanceassociation
4. Canes Invested proactively teaches people of color and marginalized communities methods of building wealth.
Faculty Adviser: Dr. Kennedy Robinson, Director of Multicultural Student Association, Student Contact Email: canesinvested@miami.edu, Typical Recruitment Period: Fall & Spring
5. Student Managed Investment Fund offers hands-on experience in managing a real investment portfolio, allowing students to apply classroom knowledge to real-world investments.
Faculty Adviser: Jason D. Damm, Student Contact Email: j.damm@umiami.edu, Typical Recruitment Period: Fall & Spring.
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This article was published in Distraction’s Spring 2024 print issue.
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