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How to start investing while you're still in college – CNBC

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Trey Martin started investing before he was old enough to open his own brokerage account.

Now a Florida State University senior, Martin said he was paid for his role as an extra in “Dolphin Tale 2,” which premiered in 2014. His grandfather advised him to put some money in the stock market. That is exactly what Martin did.

“I took that check that I got from that movie, and I put it into Facebook [now Meta Platforms],” he said. “I had to go through my father’s account because I wasn’t old enough to invest.” 

Trey Martin, a senior at Florida State University
Photo: Jay McPherson

Martin recalled opening his own account around age 18. He has actively invested in companies across a wide range of sectors including communication services, information technology, financials and consumer staples. 

Investing can be daunting — you can make a lot of money but you can also lose a lot. Many college students or recent grads might think investing is something you do when you’re older. The truth is, the earlier you start, the more money you could make.

Here are a few tips to help college students and recent grads start investing — and be smart about it.

Set up a budget

Before acting on investment decisions, young investors should establish goals and create reasonable budgets that account for necessary expenditures, said Kristen Bitterly, head of investments for North America at Citi Global Wealth.

“Rent is probably one of the biggest ones,” she said. “But then understanding ‘After rent, what are my other expenditures? And how much money am I going to have leftover at the end of the day based on the salary that I can expect with the job that I have?'” 

Regardless of whether you are a student or out in the “real world,” you should be keeping track of how much you earn, as well as how much you need to spend on necessities such as rent, utilities and student loans. The amount you have left over after covering those bases can later be divided into savings, miscellaneous spending and investments.

One common formula is the 50-30-20 rule, where you commit 50% of your income to needs, 30% to wants and 20% to savings. There’s also the “60% solution,” in which 60% of your gross income is allocated toward “committed expenses,” like rent. Twenty percent goes to long-term and retirement savings, 10% goes to short-term and emergency fund savings, and the remaining 10% can be classified as “fun money” for additional purchases.

It’s not always easy for college students to save that much — a lot of people figure they don’t make a lot of money so they’d just rather live paycheck to paycheck. Don’t fall into that trap. Start good budgeting and saving habits now — and it will just become automatic. You won’t even miss that money because you’ve gotten used to automatically stashing it away.

Many college-aged students, like Martin, face weighty decisions when there’s money left over after committed expenses and emergency fund contributions. When figuring out your strategy, ask yourself whether you need this money in the near future or if you can afford to invest it. When we talk about investing, we don’t mean gambling with the rent money.

Jackson Walker, a senior at the University of Wisconsin-Madison, finds investments and short-term expenses do not have to be mutually exclusive.

Jackson Walker, a senior at University of Wisconsin-Madison
Photo: Brendan Miller

“I have always been a good saver, so letting go of some extra money here and there helps me feel good that I am helping it grow without depriving me of short-term opportunities like going out to dinner with friends,” he said.

Bitterly notes many budgeting tools can be found on the internet, easily accessible through Google searches. There are a lot of free apps to help you set up a budget such as Mint, Goodbudget and Personal Capital.

It’s important when budgeting to fill “all the buckets,” says Lauryn Williams, certified financial planner, founder of Worth Winning, CNBC Advisor Council member and four-time Olympian. That means whatever formula you are using, make sure you are committing money to every single component — needs, wants, savings, etc.

“I go through my budget, and I found $800. Three hundred of it I’m going to put toward my emergency fund, $200 extra I’m going to put toward my student loans and then $300 extra — the other $300 — I’m going to put toward investing,” Williams explained.

“Now you’re filling up all the buckets. You’re paying down your debt above and beyond the minimum payment. You’re saving money towards your emergency fund, so you’re making sure you have some cash on hand so you’re not going into credit card debt should something happen, and you’re also investing some money,” the Wisconsin senior said.

Assess your risk tolerance

Once you’ve made sure the money you plan to invest is legitimately nonessential (meaning, you have your bills covered), the next thing to ask yourself when it comes to investing is: How comfortable am I if this investment results in a significant gain or loss?

Of course, we’d all love a gain. But how about a loss? Technically, when your investments go down, it’s only a loss on paper — it’s not real unless you cash out of your investment. So, if you’re in your 20s, you can afford to have investments go down and know they have a chance to recover before you need that money. But are you comfortable with even a paper loss, let alone a permanent one? How much are you willing to gamble?

If the idea of any kind of loss makes you nauseous then you want to be more conservative in your investments. It means you will might make less when investments are going up but, importantly, it also means you limit your potential losses.

This is how you determine your risk tolerance — your level of comfort with unknown outcomes that could affect the value of your financial portfolio.

More from College Voices:
Tips for college students: How to rent your first apartment
Are you doing your job search right? How to land your first job after graduation
Setting up a budget right out of college is easy—and smart

Many young adults are not financially independent until they graduate college and obtain stable incomes, or rack up enough paychecks to cover their bills. If you don’t need the money in the near future, you are in a position to take on more risk in the market. (By contrast, older folks close to retirement age usually want to minimize the amount of risk they take — they have less time to recoup investment losses.)

Many financial advisors and investment experts preach the gospel of taking the long view. Take their word for it, as time in the market improves your chances of winning big.

“Time is on your side. It’s really not about trading or market timing. It’s more about time in the market,” said Bitterly, explaining the benefits of starting young. “This idea of having a longer-term plan — the idea that you’re going to have a much longer period of time to build wealth and to grow your investment assets — means that, generally, you can take more risks, so you can afford to take more risk, have more exposures, for example, to the equities part of the market.”

That doesn’t mean every investment you make when you’re young will pay off so it’s good to do some research and learn a little about investing.

“Since I was only in my early twenties in college, I knew I didn’t know too much about the world and market, so I was cautious,” said Rebecca Perla, who graduated from the University of Wisconsin-Madison in the spring. “Now, I have more insight, consume more information, have an investing foundation and paycheck to use to invest. Thus, I’m starting to see myself take a little more risk.”

“I’m young, out of college, don’t have too many responsibilities or crazy expenses and have some money, so I think this is a good time to take some risks,” Perla said.

Don’t panic and cash out when stocks drop

And, it’s important that you don’t cash out just because your investments are falling and making you nervous.

“We have clustering in market volatility where you see those big sell-offs, and then you see the subsequent gains,” Bitterly said, noting how people often pull out of the market on sell-off days when they think they can’t withstand the risks. 

That is another way you could lose a lot of money. If you cash out when stocks or bonds are down, you’ll miss any bounce back. The only time you should be cashing out when the market is down is if it’s an emergency and you absolutely need that money.

Williams finds young investors sometimes misconstrue the meaning of taking on risky investments.

“I find that young investors are sometimes risk adverse but also unaware what it really means to take on risk,” she said.

Rather than put all your financial eggs in one basket by investing in a single stock or a single sector, young adults should consider diversifying their portfolios, Williams the financial planner suggested. Understanding your funds and remembering you have time in the market are essential to minimizing risk.

Now, if ever, is your time to make minor investment mistakes you can learn from.

“I’m not playing the game to lose all my money either, but I think that, at our age, we have the amount of time ahead of us that we can make that money back,” said Martin. “We are in a position where we should take more risks because the payoff for those risks will be huge.”

Do your homework

Before putting your money into a share of an individual company’s stock or a fund that holds many assets, you need to do your research.

“Take the first step by reading Wall Street research, by listening to conference calls and by reading the quarterly 10-Qs that publicly traded companies are required to file by the SEC [Securities and Exchange Commission],” suggested Guy Adami, director of advisor advocacy at Private Advisor Group and a trader who appears on CNBC’s “Fast Money.” “It will seem daunting at first, but over time it will pay dividends.”

Individual investors have a more level playing field than ever before with broad access to exchange-listed companies’ information, Adami believes. Despite being “both empowering and overwhelming,” this access to information is largely beneficial for novice investors looking to take their first steps.

“Educate yourself about what’s out there, and make sure that you’re not investing in something that you don’t understand,” Bitterly advised.

She emphasized the importance of analyzing where you’re putting your money, understanding risks and return potential, and being comfortable with the outcomes you may be presented with.

Read up on investment options to better assess the risks that come with available methods. Ask family members, friends and advisors what they’re investing in, and use charts or graphs available on the internet to see how those stocks and sectors are performing. 

Ask how these people are investing, as well. Do they prefer direct investments, apps or specific investment platforms? Do they choose specific stocks or funds on their own, or do they rely on an app or platform to choose their balances and investment options based on predetermined amounts of risk?

These factors rely heavily on spare time. Researching a stock or other investment isn’t a one and done — you have to keep tracking company news, earnings and other factors that might affect the company’s business — and its stock performance. A good investment yesterday might not still be true today. Young investors attending college or beginning their first full-time jobs post-graduation may not all want to conduct consistent, time-consuming research when there are accessible experts who can. If this applies to you, consider automated investing apps such as Betterment or Acorns.

Benjamin Zhu, a senior at New York University
NYU Stern: Berkley Center for Entrepreneurship

“I’ve heard so many new strategies, but almost always, those involve unrealistic expectations for both my skill and time commitment,” said Ben Zhu, a senior at New York University. “Maintain a realistic, but still cautiously optimistic perspective.” 

Find investment methods that work for you

In doing your homework, you will come to find investment methods rely heavily on personal preferences. An expansive number of available investment options gives new investors the flexibility to identify methods aligned with their interests and levels of risk tolerance.

Apps such as Robinhood, Acorns Invest, Betterment, SoFi Invest and Stash are among many platforms for new investors who can create accounts and develop low-stake investments.

Stephanie Guild, Robinhood’s senior director of investment strategy, explains how these buy-ins work at her company in particular.

“At Robinhood, for example, we have fractional shares, so you can start building a portfolio for as little as a dollar,” Guild said. “You can actually buy a stock for $1, and in markets like the ones that we have, where they’ve been going down more than they’ve been going up, using tools like dollar-cost averaging which allows you to little by little add to positions over time and get some stuff on sale — more on sale than they would have been maybe originally — that can really compound wealth over time.”

Many of these apps allow beginning investors to look at exchange-traded funds, or “ETFs.” These are groups of assets that allow investors to buy exposure to entire markets or types of industries, from technology to real estate, by grouping individual stocks into a fund traded on a stock exchange.

“If you are a new investor, an ETF or exchange-traded fund is the best way to keep your life simple,” said Williams, who advises beginning investors to lower potential risks by seeking out funds, not individual shares. “Be well diversified so that you are not taking on too much risk, and be in a really good position.”

Another way to diversify your portfolio is by buying an index fund, such as one that mirrors the S&P 500. Index funds contain a wide range of companies and are another way to diversify holdings and limit risk. Whether a single stock soars or crashes, it won’t take an entire index with it. 

“Right now, I think, is an excellent opportunity to actually have a diversified portfolio and benefit from some of the dislocations that we’ve seen in the fixed income market,” Bitterly said.

If you care to learn more about individual stocks and bonds or other types of funds, consider using low-cost trading platforms such as Schwab, TD Ameritrade or Fidelity. These platforms have minimal barriers to entry and assist new investors as they gain their footing and begin to track stock performance. 

Here, new investors can look at individual stocks — shares of specific companies. They can play around with bonds, which are essentially borrowings by companies and governments that promise to repay the principle plus interest. And, they can participate in mutual funds — portfolios of stocks or bonds containing the assets of multiple investors. 

“I invest in a number of mutual funds through my financial advisor with Northwestern Mutual,” said Walker, the Wisconsin senior, explaining his investment strategy. “Outside of that, I own no individual stocks.”

New investors should also consider high-yield savings and other accounts that earn interest — they offer less reward than stocks, bonds or mutual funds, but a lot less risk too.

These are a good idea for, say, emergency savings or for those investors who want to slowly grow their money but with a low tolerance for risk. Savings accounts help individuals earn interest while simultaneously setting aside capital. High-yield savings accounts pay a higher rate than typical savings accounts. Right now, for example, many of these accounts are yielding interest of 1.3% to 2%, compared with less than 0.5% for most standard savings accounts. Certificates of deposit, or “CDs,” are similar to savings accounts but they supply an even higher interest rate. The only catch is that you have to keep your money locked up for a certain period of time (often one year or more) or incur a penalty for early withdrawal.

High-yield savings accounts or CDs issued by banks are also backed by the Federal Deposit Insurance Corp.

Steer clear of the herd

Online influence and the rise of digital communities are sneaky – and may skew your investment goals if you get wrapped up in them. So, take what you learn into consideration but at the end of the day, make your own decisions – don’t just follow the herd.

A good example of this was GameStop during the Reddit “rebellion” of January 2021. Rapidly rising stock seemed attractive, but the underlying business and the valuation of shares didn’t justify the runup.

The result? Dramatic losses.

“It is imperative that one understands the inherent risk in any investment, let alone the risks associated with the trendy meme stock of the day,” Adami explained.

Meme stocks — company shares experiencing increased popularity through social media — are quick to develop large followings, which may appear persuasive. This is the herd, and you want to stay away from it unless it’s chasing a single-stock name you support after doing your own research.

Adami likes single-stock investments as they allow individuals to “invest in what they know,” a mantra made popular by famous investors like Warren Buffett and Peter Lynch.

“It is remarkable how many publicly traded companies we encounter, know, visit [and] frequent in our everyday lives,” Adami said. “The information we can glean from ‘just paying attention’ to what is happening at these stores, restaurants, websites, malls, etc. provides a treasure trove of investable information if one is open to observation through that lens.”

Maintain a schedule

Establishing a routine is necessary after making your first investments. Schedule a time to regularly check in on your investments, be that every week, biweekly or once a month.

Assess how well – or not so well – you’re doing in the market. While experts recommend time in the market, you are not obligated to stick with a stock or fund that pushes the financial boundaries of your risk tolerance. Consistent underperformance may be a good excuse for you to cash out of an investment and put that money toward a new share – and maybe take advantage of a loss that can help reduce income taxes. Or, you might decide to ride it out and invest for the long term, especially if the company or investment shows growth potential.

“Other than buying the occasional dip, I have a much more long-term strategy in mind,” said Walker of his portfolio. “I try to keep this in mind instead of pulling all my funds when the market drops. I have time on my side as a young person in the market and want to use it to my advantage.”

Martin has a similar approach, calling his recent decision to “drop some shares” uncharacteristic of his long-run market mentality.

“I don’t just throw money into anything,” he said. “I really sit on it, watch it for a while, and then if I feel like it’s just going to continuously trend upwards over time, I usually tend to invest in that. So, there’s not a lot of ‘dropping my stock’ going on.”

The senior’s initial investment in Meta was bought around $30 per share back when the company was still known as Facebook. Today, Meta is trading around $170 per share.

Success with technology stocks helped Martin decide which investments he is attracted to, as well as which investments he would like to avoid. Now he says he is trying to invest in materials, such as copper, used within technology.

Whatever your strategy, remember that nothing is guaranteed. So, you should only invest money if you are prepared to lose it. But, if you do your homework like Walker and Martin and invest while you’re young, you have the potential to profit.

“The key to both investing and trading is to have a well thought out plan ahead of time and sticking to that plan regardless of what is happening around you,” Adami said. “Ben Franklin said it first, and many have taken ownership since, the adage ‘If you fail to plan, you are planning to fail’ is true in investing, and it is true in every other facet of life.” 

College Voices″ is a guide written by college students to help the class of 2022 learn about big money issues they will face in life — from student loans to budgeting and getting their first apartment — and make smart money decisions. And, even if you’re still in school, you can start using this guide right now so you are financially savvy when you graduate and start your adult life on a great financial track. Jessica Sonkin is a student at the University of Wisconsin-Madison pursuing a degree in journalism. She is a production intern at CNBC for the shows “Fast Money,” “Options Action” and “ETF Edge.” The guide is edited by Cindy Perman.

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Local startups benefit from $35000 investment – The Kingston Whig-Standard

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Kingston Economic Development Corporation is investing $35,000 in 12 entrepreneurs in Kingston through their Starter Company Plus program.

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These micro grants will aid in the growing of the local startups in getting their feet off of the ground alongside business training and personal coaching for business owners.

According to Rob Tamblyn, Business Development Manager of Small & Medium Enterprises – the pandemic as resulted in many Kingstonians pursuing their own businesses.

“We are proud to be able to offer support and guidance to them through the Kingston Economic Development,” said Tamblyn.

The wide array of businesses that will benefit from this grant span from tattoo and spa services to contracting and driving schools, he said.

“Since the pandemic, we have certainly seen an uptick in the number of inquiries from people who are wanting to go into business for themselves.” Tamblyn said, explaining the need for funding.

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Kingston Economic Development Corporation was created with the mission of supporting the Kingston economy through providing mentorship and funds to a variety of business enterprises.

Little Friday is one of the twelve businesses in the spring cohort, Soren Gregersen and Ciara Roberts, co-founders of the new video production company, spoke to the Whig about the program.

Officially opening it’s doors in February of this year, Gregersen and Roberts heard of the Starter Company Plus Program from a business that participated last year.

“We’re going to spend the money on (Search Engine Optimization) to get some online presence and a bit of money on gear so that we can up our production value and capacity,” Gregersen said, referring to the vitality of a virtual presence in early stages.

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“We’re fortunate in Kingston to be able to offer two separate cohorts, one in the spring and one in the fall.” Tamblyn said. “So we’re able to inject $70,000 into startups or existing businesses seeking to expand.”

Each year, the corporation provides $35,000 in micro grants for each cohort to local businesses with funding from the Government of Ontario. Business owners are able to receive up to $5,000 based on the strength of their business pitches, decided on by a panel of community judges.

Accepted participants not only receive funding, but also attend a week-long virtual boot camp covering market research, digital marketing, small business financing, and hiring practice to ensure that each entrepreneur is set up with the resources and information for success.

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Roberts told the Whig that the boot camp and additional resources offered by the program has been invaluable. “It gave us a week to really sit down and put pen to paper on what we wanted little Friday to be about.”

“We focused on figuring out long term goals, marketing strategies, and marketing sales forecasts (in the boot camp)”

The pair has been receiving one on one coaching from business experts where time is allotted to get specific on obstacles that arise in the early days of business.

Interested start-up owners can apply to the Fall 2022 cohort from now until September 11 through the Invest Kingston website.

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Federal government touts London, Ont. region as possible site for investment by Boeing – CTV News London

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A pair of initiatives aimed at attracting high-skilled jobs to the region have captured the attention of the federal government.

On Tuesday, Minister of Innovation, Science, and Industry François-Philippe Champagne sat down for an interview with CTV News London to discuss the growing electric vehicle (EV) sector and other high-tech industries in southwestern Ontario.

“I don’t know if you’ve been following me!” joked a surprised Champagne when asked about rumours that aerospace company Boeing is considering a significant investment in London and the surrounding region.

He says talks are ongoing with Boeing about further investment in Canada — and confirms this region is in the running.

“London has the key ingredients that you [need] to attract this type of investment in the industry,” the minister explains.

Boeing is one of the largest aerospace design and manufacturing companies in the world.

Champagne suggested he is targeting investments that reduce the environmental impact of the aerospace industry, in particular, greener propulsion.

“What we’ve done in the automotive sector I dream of doing in the aerospace sector, which is greening the industry,” he adds.

Earlier in the day Champagne was joined by London North Centre MP Peter Fragiskatos on a tour of Toyota in Woodstock, Ont. focussed on EV investments and technology.

Fragiskatos says the federal government’s ongoing push for electric vehicle and component production in Ontario brings high paying jobs to the region.

“We’re talking about close to $40/hr plus benefits, particularly in this economy its jobs like that that are going to get people through,” says Fragiskatos.

In June, the City of St. Thomas announced the purchase of a 325 hectare (800 acre) parcel of serviced land in the community’s northeast corner aimed at attracting an EV battery plant.

Champagne was aware of the shovel-ready property and enthusiastic about the opportunity.

He believes the EV industry wants to reduce the carbon footprint of battery production, making Ontario’s mostly renewable energy hydro grid very attractive.

“I would applaud what is being done in St. Thomas, and certainly that is the type of creativity that we need,” he says. 

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Smart Money: The Top 10 investment mistakes – Alaska Highway News

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I have been doing this work for a long time. Nearly 30 years. And over that span I continue to see people make the same, preventable mistakes, over and over.

Here’s my Top 10 list of unforced investment errors.

1. Getting your financial advice from social media. If you have a question about money, what makes you think your equally uniformed friends have the correct answer? People with accounting questions will consult an accountant. People with medical concerns will seek out a doctor. But people with investing questions turn to Facebook or TikTok. It’s nutty.

2. Believing in fairy tales. Yes, I understand the allure of instant riches. Especially if someone is promising outsized returns with no risk. But huge returns with no risk is a fairy tale. Or a scam.

3. Being a perpetual GIC investor. Guaranteed Investment Certificates have their role in financial planning, but if you find yourself continuously rolling over your GICs at maturity because you don’t know what else to do then what you end up with is a permanent string of low-paying investments. On an after-tax, after inflation basis you are almost certainly losing money. How safe is that?

4. Buying on greed. If the reason that you want to buy an investment is because it is showing impressive past performance and you want to get in on the action, chances are very good that you are not making a rational investment decision. And if the investment has already gone up by that much already chances are that its too late.

5. Selling on fear. If the reason that you want to sell a quality investment is because it is showing disheartening past performance and you want to get out to avoid the pain of loss, chances are very good that you are not making a rational investment decision. And if the investment has already gone down by that much already chances are that it’s too late.

6. Confusing investment costs with losses. Buying the lowest cost investment is not the same thing as buying the best investment. If you can replace the diversification and investment decision making process at a lower cost, you might be on to something. But buying an investment only because it is cheap is a good way to end up with junk.

7. Overthinking. You really don’t need to wait until you master the nuances of a covered call strategy or do up a 200-column spreadsheet with correlation analysis before you take action. People can get overwhelmed by the choices and end up paralyzed into inactivity. Simple is usually better than complicated. Just get started.

8. Overconfidence. This one is a biggie. Way too many people think they know what they are doing with their investments, but that’s only because they don’t know what they don’t know. The tricky part is few readers will recognize themselves as being overconfident, just like everyone thinks that they are an above average driver. But if the roads are filled with great drivers, why are intersections with four way stop signs so difficult for people to figure out?

9. Burying your head in the sand. Sometimes financial decisions cause great angst, and the way that some people deal with money decisions is by not dealing with money decisions. Ignoring the situation might be a coping strategy, but it’s not going to get you anywhere. Unpleasant jobs are a fact of life. Pretending that they don’t exist doesn’t make them go away, and procrastination can allow small problems to fester into big ones.

10. Confusing wants and needs. You may want a shiny new toy right now. But you still need to eat when you get to retirement. A high consumption lifestyle is fun, but draining your retirement funds to finance it is short-sighted.

These preventable mistakes are well-known. Even so, I can assure you that people all over the world will continue to make all of them.

But you don’t have to be one of those people.


Brad Brain, CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.

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