It’s Never Too Early To Dive Into The Stock Market

By Emma Scherzer

One year ago, with close to no knowledge of economics or money, I entered foreign territory when I decided to invest in the stock market. As it turns out, it was one of the best decisions I’ve made in my young life.

Lululemon was down on their luck in early 2014. After a public relations nightmare when the company’s founder Chip Wilson said in an interview, “some women’s bodies just actually don’t work” for Lululemon’s tight fitting pants, and a major product recall on see-through leggings occurred, many people ditched the stock in exchange for something more stable.

Contrarian, value investing is based on the principle that out of favor stocks have potential for the future. With a strong brand name like Lululemon, they weren’t expected to be down for long. The company’s down turn in 2014 presented a perfect opportunity for people to invest in Lululemon because the stock was more affordable. So I emptied out about half of my piggy bank that had accumulated from cashiering at a grocery store for two years, and poured it into the stock market. Fortunately for me, my dad is an investment advisor so he was able to guide me along the way.

Rick Ferri said in an article in the Wall Street Journal that the “solution is to have a realistic philosophy and a practical plan. A philosophy might be that the markets aren’t predictable and that it’s imprudent to try to beat them. A strategy based on this philosophy might be to hold the same fixed allocation in stocks, regardless of what the market does. This would have meant buying into the market during the financial crisis when prices were low and selling some after the market recovered. That’s a realistic philosophy and a practical plan.”

What I’ve learned over the past year is that in the short term the market is very irrational, in the long term it’s more rational. Putting money into the stock market is considered speculative investing, which is a financial transaction that has a significant risk of losing all or some of your money. There’s never a 100 percent guarantee that you’ll get a return on your investment, but you never know unless you try.

For students who are interested in getting involved in the stock market, anxiety is a common feeling. Charles Rotblut, vice president of the American Association of Individual Investors says that he tries to comfort nervous investors by, “suggesting the option of pulling out a calendar and circling a few days in over the next several months. On each of those days, invest part of whatever amount you are planning to allocate to stocks into the market. This will reduce the timing risk of jumping in with two feet on a single day, while avoiding making a decision based on what you think the market will do.”

The bottom line is it’s never too early to invest in your future. Investing a modest amount today can lead to bigger returns in the future. Taking a bit of time out of your day to learn about investing now can give you the competitive edge for financial stability in the future.

Sources:

http://www.wsj.com/articles/SB10001424127887323452204578289721356165706

http://www.wsj.com/articles/SB10001424052702303393804579311062582473556

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s