Take Stock of Your Future

By Krishna Pamidi

Grandfather clocks and gaudy mansions. Here’s a way to get there.

Illustration by Junyu Guan.

Illustration by Junyu Guan.

As a finance student, I often hear and talk about the big names: Warren Buffett, Ray Dalio, Mark Cuban and almost every conversation which starts with these names is immediately followed by a name in the Forbes list of the Fortune 500 and suddenly, the air is filled with an air of intimidating arrogance and...is that a hint of egotism?  Most of us exhaust all of our investing knowledge into those two short minutes of conversation. However, there are the few Whitmanites, yours truly included, who have attempted to follow in the footsteps of the big names of the financial world. But exactly how does one go on about doing that? More importantly, how does it affect you, me and the rest of us in the long run?

Before we dwell on the complexities, it is important to understand the basic reasons why one might want to start investing, and that too at a young age on minimum wage paychecks. According to Fidelity.com what the basic idea of investing entails is giving an opportunity for your money to grow. According to Fidelity, investing is great because your money is active and works alongside you for a bigger capital portfolio which you can use later to buy that dream yacht. Accordingly investing at a young age is even better because then, your money has more time to grow. In fact, thecollegeinvestor.com states that, if you can regularly invest $175 per month at 18, you can become a millionaire by retirement age. However, if you wait till you are 30,  you’d have to put away $575 per month for the exact same result because of the lost 12 years.

Now, paraphrasing collegeinvestors.com, the idea of putting hard-earned money away, not to be seen until you are in your sixties, is understandably not sexy enough for most teenagers. After all, $175 can buy you a wide variety of things, from a bloody good evening at an upscale restaurant to 150 McChickens, if you’re into that sort of thing. As Fidelity.com puts it, this is probably the biggest reason why four in ten millennials don’t want anything to do with the market. And even the four who do invest more conservatively historically speaking. That, inevitably leads to a lower payout at any point in your investing career and also leads to lower capital to work with for the market and the companies involved.

Since investing is a possibility open to everybody, it is important to acknowledge the opportunity that this poses to international students, particularly those whose native currency value is lower than the US dollar. According to redbus2us.com, international students with an F1 visa form can actively participate in the US stock market. Assi Itani is one among the many international students who take advantage of this. Itani, a Lebanese international undergraduate who regularly invests and diversifies his portfolio in the US stock exchange says, “Since $1 is somewhere around 1,500 Lebanese pounds, investing here is an opportunity for me to make some extra money, at least to pay off my monthly expense, ”he says. Assi, while being modest, does raise an interesting point. A passable rate of return per year of say, 1.3% for a random labeled stock, with an initial endowment of $300 may not seem like much. $4 to be exact, but that can buy a Lebanese citizen a day out to a tourist attraction or an amusement park, according to Globalprices.com .

There is a flip side to dealing with international markets. As a US resident, investopedia says that you can either contact your personal brokerage firm to see if they trade your desired stock in the desired country, or the easier option would be to set up a brokerage account on the stock exchange of that county. Either way this can be beneficial for beginners, who are hesitant with investing large sums of money and are looking to gain experience in the investing market.

A few simple things that every beginner investor should come to terms with are a brokerage and stocks. In layman’s terms, a brokerage is a mediator who buys and sells your stocks for you. Typically, the fancy people from The Wolf of Wall Street and Boiler Room work here.These fine gentlemen often alert you about up and coming stocks which might interest you. If you do get interested, then you ‘trade’ for the desired number of stocks. As a beginner you’d trade money for the stocks, but as you expand your portfolio you can sell existing stocks in your portfolio for new stocks.  

I would recommend starting off by investing in penny stocks. Penny stocks are stocks of companies which don't have enough capital to be listed on the big screens of New York, London etc.The by product of this lack of capital is the low share price, hence ‘penny stocks’. Since these days even the brokerage firms don’t charge you, it shouldn’t be too hard to gain some experience..” says Douglas Hutton, the economics teacher of the Glastonbury High School, whose personal portfolio includes over 3,000 stocks in the chinese market.

Since we’ve discussed the act and benefits of investing, now is probably a good time to discuss how one would go on about that. As youngfinances.com puts it, it is incredibly important to know yourself first. Are you a risk averse person or can you shoulder risk for the higher payout? Are you interested in diversifying or do you have a particular industry in mind?  How long do you want your money in the market for? All of these are important questions and if you are slightly intimidated by these, I have some good news for you: you understand the stock exchange. It is important to acknowledge that while the stock market has been steadily putting out higher rates of return for the past seven decades according to NASDAQ, one should never be too confident. Nevertheless, these are simpler questions than they appear to be. A simple research on upcoming industrial projects and graphs on projected growths should inspire some confidence in you to invest in any industry that suits your fancy. The next step is to open an investing account via any brokerage firm and off you go.

Investing may seem like a daunting rabbit hole that many may view as an unnecessary addition to our already complicated lives, but it doesn’t have to be. Investing can start off with as little as $25 and weekly oversight can keep you on top of your money which will be  out there growing. As a Whitman student, it might seem obligatory for me to say that, but I genuinely believe that as young adults who are invariably going to enter and actively participate in the growing economy, it only makes sense that we understand the fiscal world that we live in-- and do our best to maybe even control it.  

Krishna Pamidi is a sophomore studying Finance in the Whitman School of Management at Syracuse University.