To Invest Or Not To Invest?
By definition, a stock is a security that represents ownership in a corporation in addition to a claim of the corporation’s assets and earnings.
As the former president of the MDC Investment Club, I’m here to tell you why you should invest in the stock market, especially as a college student.
Financially, one obvious reason to invest in the stock market is the potential gains. It’s as simple as buying a stock for a penny and it raising by a dollar in ten years. That’s extremely small growth, but because a penny is so cheap, you can buy 100 shares per dollar. Now if that stock goes from .01 to 1.01, you can make $100 of something that only costs you a dollar plus commission costs, which are the costs you pay to make a trade. Typically commission costs range from $7 to $10 so if your commission were $8, you would make $92 off of a stock that costs you a dollar. The opportunity for such financial gains is vital to college students since some of us — myself included — are required to take out loans to advance our education.
Most college students, especially undergraduate students, are advantaged by youth. Likewise, stocks of an infant company have time to grow. Investing in it means your return can grow as the company grows.
Omotayo Ogidan, a criminal justice major at North Campus, says “stocks are too scary for me. I just want my money to grow nice and steady.”
Indeed, stocks are very dangerous financial investments due to the fact that they can yield the highest financial gains. A safer way of investing in stocks is to invest in a corporation that gives dividends. These are additional returns that you get based on the amount of time you hold a stock and how many shares you have in conjunction with their dividend rate, independent of their stocks’ values.
An even safer approach is to invest in bonds, essentially loans that can be given to an entity and assuredly return a profit through interest, although the process is slower and the interest rates are lower.
Henry Robert, a humanities professor at North Campus, suggests students take a financial management course before they dive into the stock market. If that’s not your cup of tea, you can get some practice with fake stocks and trades before actually spending money on updown.com and marketwatch.com. I’ve had lots of fun competing with investment club members on these sites. I was also able to hear expert advice from certain investors as well.
Investing is a dangerous game that can yield a lot of benefits. As college students, we should open our eyes and see what it can do for our future. Time is on our side.
Quinn A. Allen, 20, graduated from the Honors College at North Campus this past summer. Allen is currently a junior studying Finance at the University of Miami.