Flickr User 401(K) 2012
About 70 percent of millennials have no clue about investing, according to a study conducted by the financial-advice website Bankrate. Dr. Oliver Jones of Hampton University’s School of Business said that young adults may feel like investing is too complex or confusing. “It can come off as too much information,” Oliver said.
Jones also said that because many young people witnessed their parents struggle during the housing crisis, they have become skeptical about spending and saving money.
Investing is often associated with the fast-paced erratic stock market. In actuality, an investment is anything you put your money into with the expectation of gaining more money in the future. This is actually good news: If you are a student here at Hampton, you are already an investor!
But while investing in your future career is a great move, here are some other things you can invest in.
Stocks are equities that help companies gain capital when a company goes public on the market. Having one of these are like owning a tiny piece of a share of the company.
There are also mutual funds available. Mutual funds are like the Thanos of the investment world. This is because, as Investopedia defines it, mutual funds are a “pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.” Investing in these often are lower risk and can also be on the cheaper side.
You can also invest in projects. These can be local businesses, startups or even people. For example, your friend wants to open a new hair salon and asks you to invest in her business so she can purchase a shop. Flash forward a year or two later, her salon is booming and you have your loan back and then some.
Now that you’ve become familiar with some of the different types of investments, here are some tips to help get you started.
Rule number one: Do your research. Investor.gov warns investors to “never invest in something you don’t understand.” Ask the tough questions like you’re a shark on the popular TV show Shark Tank. Don’t give your money to anyone or anything you don’t know everything about.
Don’t invest in what just happened, invest in what is expected. It’s easy to get caught up in what’s booming now, but the point of investing is so that you can make money in the future. Follow trends that are projected to grow over time for a long period of time. Also, try and diversify your investment funds with creating a portfolio of different investments.
Don’t follow the crowd. While there are tons of books written with the promise of providing the secret to investing, Jones doesn’t recommend them. “When the people who write these books are successful doing it their way, it means that isn’t the way anymore,” Jones said. “Because now everyone has [found] out.”
The professor instead suggests that beginner investors create their own methodology. “You have to find your own unique way,” he said. “The more unique ways you find, the more successful you are.”
Still struggling trying to get started investing? Don’t worry, because there are resources available right here on campus. The university’s School of Business offers courses where students can practice investing with mock stocks. There is also an entrepreneurship and investment club where like-minded students, regardless of major, can share their interests in profit-making ventures.
So, next time you find yourself with some extra money, consider not spending it on Chick-fil-A. Smart investments and a little time can turn your Chick-fil-A money into 5-star restaurant money.