A beginner’s guide to stocks

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While the stock market might seem to be an unnavigable mix of yelling hawkers and confusing terms, students don’t have to shy away.

Discount brokers such as Scottrade and E*Trade provide training seminars and services to educate beginners in what they can do to make wise investing decisions.

Jase Adams, a sophomore from Denver, majoring in finance, said investing in stocks has helped him make more than he would have by depositing the money in a savings account.

“If you manage your money well in the stock market,” he said, “you can get much better returns than any bank account.”

Adams started investing when he was 16. He was influenced by his father, who had been doing it in a professional setting. Adams said he has enjoyed the experience because he makes decent money and feels it is a good way to get involved and learn about business. However — a word of caution — beginners need to be careful when first starting.

“The first rule of investing is to not lose money, so if you don’t know what you’re doing, don’t just go into it,” Adams said. “You shouldn’t invest for anything less than a year because taxes and commissions are going to eat up your returns; so, you have to be thinking long-term on all your investments.”

Austin Read, a freshman majoring in finance, from New Canaan, Conn., started investing his senior year of high school. He had made money doing various summer jobs and had the option of either placing it in a bank account or in stocks. Read advised other students not to jump into the first stock that looks attractive.

“Research is money,” he said. “There are thousands and thousands of brokers in the United States that spend the entire day researching and running numbers on stocks, so I would always look and refer to their advice when investing money into any sort of stock.”

Louis Evaga, branch manager at the Orem office of Scottrade, a national brokerage firm, said there are advantages for students who invest wisely to reach financial goals.

“There are many different products for safety, like bonds and mutual funds,” he said. “Especially for younger students, education is the biggest factor in getting into the stock market.”

Scott Marsh, a professor who teaches personal finance, said students can consider investing in stocks, as long as it is long-term.

“The best and most important thing they’ll know is to diversify their investments and not expect fast returns,” Marsh said.

If students are patient, though, the dividends are historically beneficial. Candlestick, an online trading forum, reported stock market returns an average of ten percent annually.

Marsh warned students not to invest money they need for necessities.

“What they invest should be money that they are not planning on spending in the next five years, on school or a house,” he said.

Stressing the importance of long-term investing, Marsh said students should ensure they focus less on returns and more on what else they can contribute to their investment.

“We have control on what we put in,” Marsh said. “Students have to have a strong understanding from the beginning that they shouldn’t worry about ups and downs in the market.”

Marsh said people make more money as they continually contribute savings into their brokerage accounts, and they should play it safe with their investment choices.

“That’s how you make more money — invest more money,” Marsh said. “The key is not learning fancy ways. It’s learning great ways to invest more money.”

Marsh left students with some words of advice.

“If students don’t know a lot about the market themselves, have a mentor who invests their own money wisely that they can consult with, like a family member or friend,” he said. “Make sure it is someone who does not make a commission off them.”

Students can learn more about investing by taking BUS M 200, a personal finance class.

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