One third if not more of us Sauder undergraduates will decide go into a finance specialisation, and for a lot of people that means a life in the stock market even if there is much more to uncover in the world of finance. After one of our recent classes, finance 2, we all got the chance to learn and further develop our understanding and interest in finance. The PMF presentation was surely very interesting for some and a program that a lot of us will surely try to be a part of next year.
During our time in university, us students are always looking for making some money, preferably easily and quickly, as it requires the least effort. And at a quick glance the stock market can, if done correctly, seem like a good place to make that kind of profit. Buying a share of a company at a low price and selling it quickly in a matter of hours or a maximum of a couple of days, should mean quick profits right?
This method of ‘investing’ is called day trading [1], and in my opinion looks a lot like gambling, which as we know is extremely risky and as students I’m not sure we can afford or should be putting ourselves in these risky situations. Nonetheless a more sensible approach to investing is to look at it in the long run. When we buy expensive clothes we think of them as investment pieces because they’ll last us a long time, so we should do the same with stocks.
Investing in the more traditional sense consists of buying shares of good companies, of which you understand the industry and believe in. Exploiting your skills, knowledge and assets to find good stock is your best bet. The next step is to learn to be patient, but more importantly to want to learn. Patience in finding the best company for you to invest in but also patience in terms of waiting for your profits to develop over time. And learning, done by reading books, articles, balance sheets, etc. [2]
In an ideal world we’d all like to have the highest return on investment (ROI) as fast as possible. But reality is that won’t be possible for most of us unless we get extremely lucky, especially when starting with a smaller budget as a university student, but when talking about money being lucky isn’t what we should be hoping for. Investing should be about making the right choices with the correct information to back it up for the long run instead of making on the cuff decisions because of an incentive to make quick money, also known as day trading.
Word Count: 445
Sources:
Nicastro, S. (2014, September 13). 5 tips for college students interested in investing. Retrieved November 12, 2017, from https://www.usatoday.com/story/money/personalfinance/2014/09/13/college-students-investing-personal-finance/15461381/
Survivor, T. W. (2017, February 15). Trading vs Investing. Retrieved November 12, 2017, from http://blog.wallstreetsurvivor.com/2017/02/15/trading-vs-investing/#