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July 24, 2021
Right now, just 21 states require students to take personal finance coursework in order to graduate from high school – but even then, only a few states require stand-alone classes on the topic, according to the Council for Economic Education. Often, it’s just rolled into other classes.
When you boil it down, less than 12% of students are required to take stand-alone personal finance classes, according to research by Next Gen Personal Finance, a non-profit organization aimed at teaching students about personal finance. And that number drops to 7.4% when it comes to Black and Brown students.
My first introduction to the stock market was in the 4th grade in my “academically talented” class. We researched different companies and then “invested” pretend money in a stock of our choice. We’d have to make note of stock prices, market competitors and external influences that could impact the company and value.
Naturally, I went home to tell my mom about the project. I chose Apple, or as Nasdaq would see it, AAPL — its stock symbol. After talking to my mom about the stock, she saw the opportunity to invest. This was back in 2010 when Apple’s stock price was around $15 a share. From that moment on, she began to invest in stocks under my name.
Today, Apple’s stock is around $134 a share. I wish I could say that at age 10, I was a keen market analyzer and I saw the future trajectory of Apple as a company, but I can’t. Honestly, I just chose Apple because I was really into my third-generation iPod Touch. While it isn’t the most stock market-savvy method of investing, it’s a starting point — one that you should pay attention to.
Think of a product you love. Do a lot of your friends love it, too? If so, that’s a good place to start — though you should dig a little deeper into the company and the stock before you dive in. (Note: Paying attention to a product a lot of people love is different than following the herd and investing in GameStop just because “all the other kids are doing it.”)
University of Michigan senior Roy Gebara was introduced to investing when he was in high school with his dad and has since been an active player in the market. When Gebara first started investing, his portfolio (a group of stocks he’s invested in) was mainly blue chips. Blue-chip stocks are shares in companies that have an excellent reputation, a history of performing well and often pay dividends (a share of the profits) to investors. For the same reason I picked Apple, that’s how Gebara picked Costco.
“One of my first investments started off like: My family loves to shop at Costco,” Gebara said. “So, then it was a good exercise to think analytically about the business … how it’s different from its competitors, etc. And it’s proven to be like a good investment.”
Then, Gebara started to think more strategically about which stocks to buy into — looking at undervalued industries and trying to anticipate which would see an eventual boom. Undervalued companies are companies that have great growth potential but their stock is still relatively low. He said right now, he’s been looking into electric car stocks and home improvement stocks.
“It’s where I see the economy moving toward,” Gebara said. “I also like to think about what I’m seeing in front of me that I think will continue to do well.”
Gebara’s favorite stock that he owns is Lowe’s. He said because people have had to stay home due to the pandemic, the stock has done well as more people took on home improvement projects.
Gebara said he wishes he would have bought into Zoom or other online video platforms before the pandemic really took shape since those stock values have risen significantly over the past year. He said this takes a bit more time and research to make accurate predictions but he said for college students, now is a great time to invest.
It’s great to start investing young but you have to be careful not to fall into stocks that are too overhyped — especially if you don’t know what you’re doing — cautioned Yanely Espinal, director of educational outreach at Next Gen Personal Finance, an organization that works to bring personal finance courses to middle and high school students across the country.
Espinal said a safe starting place for investing in stocks is to purchase bundles of stocks through mutual funds or index funds. Both types of funds are managed by a finance professional and then you have the option of investing in them through places like your 401(k), a personal retirement account or brokerage account.
“Historically, when you look at all the data about the stock market, how it performs ... after rough times, historically, it always recovers and goes up because that’s how the U.S. economy works,” Espinal said. “It has its ebbs and flows. There’s good times, there’s bad times, there’s winter, then there’s summer, then winter comes again. It’s a pattern. And you know how to predict what’s going to come. You just don’t know when it’s going to come.”
As an investor, you need to pay attention: Where are the trends?
During the pandemic, people weren’t going out to eat or going on vacation. But, they were on Zoom video calls for work and they were doing home improvements. Also, as the pandemic went on, you saw people from cities start to buy houses — housing became a hot investment.
And don’t just spot a trend, plop your money down and walk away. Keep paying attention so you know when the trends turn. Right now, for example, a lot of big investors are already starting to bet on the economy fully reopening, people spending money, traveling, eating out, etc.
University of Missouri junior Torrey Davie said he has seen success in investing because he follows these stock market patterns and trends. Davie began investing in stocks in August 2020. Davie said his main motivation to get started was looking at investing as an additional source of income to the job he already had. Seven months in, Davie considers himself to be a “middle” investor, where he said he isn’t a beginner anymore, but he isn’t an expert yet.
“I’m really into patterns,” Davie said. “When I heard the PS5 was coming out in November, I decided to jump in and invest in Sony. I’m a big PlayStation fan and I had a feeling there would be a big spike in stock once the new console dropped and I was right.”
Davie has also had a hand in investing in riskier stocks like GameStop during the February short stock frenzy (Shorting is when traders bet against a stock). And, in this case, an army of Redditors and other individual investors decided to counter all that “short” activity by buying the stock en masse. Davie said he made an initial investment in GameStop and has since seen a 50% return. This means after investing $100 in the stock, Davie made a $50 profit. He said he decided to invest after being encouraged by the different investment group chats he’s a part of.
“Like I said, I’m not an expert,” Davie said. “So it’s been helpful to hear recommendations from people who have had more experience in investing and use that as a way to make note of what stocks to pay attention to.”
Though, it’s important to remember when you’re following someone else’s advice (especially on the internet): Know your source. Trust your source. And do your own homework to see if you can find data to back up that advice.
Davie also invested in exchange-traded funds, which are funds that track a particular index, sector, commodity, etc. These are also managed by a financial professional like mutual funds and index funds, though there are some differences.
Davie’s investing savvy has provided an opportunity to build intergenerational wealth. Davie said his mother didn’t get into investing or understand how investing could provide long-term income until he did. Today, he teaches his mom some beginner tips and tricks for investing, and also gives her recommendations on what stocks to buy into.
Davie said one of the reasons his mother and other families in marginalized communities are unaware of the possibilities of investing is because many think that “learning about stocks is for the rich.” Davie wants to break that cycle: He wants an understanding of money and investing now, while he’s in college, so that one day he will be in a position to teach it to his kids.
“We can look at our generations of minority families that may not have had access to banks or financial services and see that financial literacy is just something that wasn’t taught at an early age,” said LaShea Reaves, founder of 8 Cents in a Jar, a Florida non-profit that works to get students in marginalized communities introduced to financial literacy. “By exposing students early today, especially minority students, we’re literally allowing them to shift their socioeconomic status.”
8 Cents in a Jar hosts an annual stock market challenge where roughly 35 Florida students, from elementary to high school, compete in teams to win prizes and shares of stocks. This year, 8 Cents had over 120 students participate in the challenge. In addition to this program, the non-profit also hosts a number of workshops for parents to help them gain the financial literacy they weren’t exposed to during their younger days. Reaves said her organization wants to build up marginalized communities because there are a lot of hindrances to their success.
“I feel like there are always people, lobbyists, organizations that do not have the best interests for our students at heart,” Reaves said. “There are certain companies that feel OK, well, we need people to be financially illiterate. We need them to stay within the system because that is a profit for us. We need individuals to continue to go to check cashing stores and payday loans because it is a business, it is the economy of it. We need people to stay low.”
Reaves said there have been strides, on the state level, to overcome these problems, but with limited funding and resources in the education system, she said this will be an issue that will take several years to overcome. In the meantime, her organization works on outreach tactics to get young people excited about investing.
It’s great that there are organizations that are working to make all of us aware of the importance of investing — and teaching us how to do it. But, it’s up to each of us to be accountable for ourselves, our money and our future.
The first step is to just start paying attention. What’s hot right now? What could be the next big thing? Then dig in and find out more.
Gebara said the industries on his radar are technology and car stocks, like Tesla. Davie also likes technology stocks, as well as cannabis stocks as the product begins to become legalized in more states across the U.S.
Image Source: Getty Images
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