A look that could be described as mild terror flashes across the face of Marist College senior Connor Norton when he is asked what he knows about the stock market. Knowing that he has only a few months until graduation, said Norton, has made him realize how unprepared he is for certain “grown-up” concepts. “I don’t feel confident at all,” he said, looking abashed, “I’ve never had any training in investments. I wish I had been taught how to interpret trends, or what type of industries perform certain ways…It’s hard to even talk about it now because I don’t know enough about what I’m saying.”
Connor is not alone in his worry. A nationwide survey conducted by Inceptia in 2012 showed that 89 percent of first-year college students who responded scored in the “C” range or below on a basic financial literacy test.
Marist College student Matthew Hunt reviews current stock trends online.
“We aren’t learning these things in school—or anywhere,” said Marist College senior Odessa Turner-Blanker. “Even small things like the ability to finance your car. For example, when you hear that the Dow is really down today, some people understand that means they can’t apply for a car loan this week, and other people don’t have a clue what that means or how it affects them.”
Understanding the basics is, as with most concepts, the first step in the learning process. To begin your financial education in the stock market you must:
1. Get started:
Brian Haughey, the director of the investment center at Marist College and a professor of finance, believes it is important that a person begin participating in smart investment at an early age. Haughey gives this analogy: If a 23-year-old begins investing now, and puts about $5,000 per year into stock investments until he or she is 65 years old, and if the market earns them about 15 percent over that time-span, that person will have accumulated about $8 million in stock by the time they retire. On the other hand, if that person were to wait until they are 28 years old to invest, they will need to invest twice as much money per year, about $10,000, to accumulate the same amount.
To begin, you must create a brokerage account. Visit a brokerage website–Haughey recommends interactivebrokers.com–then apply and create an account. You’ll need to have some money to start with, a few thousand dollars is smart, but as little as $500 is fine, too.
2. Realize how investments will affect you:
“When you start your first job,” said LaRocco, “if the company has a 401k or some other investment plan, they will ask where you want your money to go. If you don’t know, you’ll be at a disadvantage.” LaRocco explains that the company might provide you with a list of investment options, from which you can pick what works for you. Continue reading