By: Matt Farrow | Student Life Editor
Disclaimer: This is not financial advice, anyone who is interested in investing should conduct further research. If you are under 18 years old you may need to open a custodial account under the supervision of an adult.
Today’s fast pace world seldom leaves time for managing money. Many students not only have scholastic responsibilities but work part time and play on the sports team and have club meetings and community service; whatever left is time to sleep. But students may want to consider taking just a few hours a year to go over their finances because it could be the difference between retiring broke or retiring a millionaire.
The stock market appreciates at approximately at 10.6 percent a year. That means that if one invested 1000 last year they could have made over 100 dollars for doing absolutely nothing but letting their money sit in the market.
In reality investing in stocks actually pretty risky and it’s relativity easy to loose money, on the other hand, investing in the stock market is not. One can start investing the stock market via something called index funds. These are a low fee compilation of a select groups of stocks. By investing in an index fund you effectually invest in an average of the stock market not just in a single company.
Let’s compare three people’s finical habits and their effect. The first person has invested 10% of their income into index funds since they first got a job and did not stop until 65. The second waited until they were 40 but started contributing 20 percent of their salary in to index funds to catch up. The third person decided not to put their money in the stock market and contributed 10 percent of their yearly salary to their bank account earning around 0.1 percent interest a year.
| Age when starting | yearly contribution | Average appreciation rate | Total at age 40 | Total at age 65 |
| 20 | 5,900 | 10% | $371,714.75 | $4,665,692.39 |
| 40 | 11,800 | 10% | $0 | $1,276,544.83 |
| 20 | 5,900 | 0.1% | $149,432.93 | $271,697.03 |
- The median salary in the U.S. is around 59,000 a year. The “Dow,” a popular index fund, has averaged at increasing around 10 percent a year.
The person who started investing at age 20 has ended up with nearly four times as much as the person who waited until they were 40 and tried to play catch up. Investing is something that students can start now; students like Marc and Jack have and you can too.
“The earlier you start the more money you make” Said senior Marc Monier. “That’s compound intrest for you.”
“I enjoy investing in stocks because its fun to see where the market goes” said senior Jack Bystry.
Further Resources:
Popular Index funds: Dow Jones Industrial Average (DJI), S&P 500 Index (INX), Nasdaq Composite (IXIC)
investopedia.com
Book: The Montly Fool Investment Guide for Teens
Leave a Reply