Everyone Is an Investor
When you think about it, every pound you spend is
an investment in something. Depending on how you spend
your pounds and pence, your financial assets increase
or decrease in value.
Let's say you spend £50 on a new pair of Nike
trainers. After you've worn the shoes to school for
a week, you'd be lucky to sell the shoes for £10
at a rummage sale. This is an investment that decreases
in value.
On the other hand, let's say you use that £50
to buy shares in Nike, Inc. Then every time a customer
buys shoes from Nike, you are sharing in Nike's profits.
There are two ways you could make a profit on your
Nike shares:
- As long as you own
Nike, every time Nike pays quarterly dividends to
shareholders, you'll get a cheque.
- When the price of Nike shares goes higher, you
could sell your stock and earn what is called a
capital gain (or profit) on your investment.
Increasing Your Wealth
The next time you earn money or receive some cash
as a gift, consider investing it in something that
goes up in value. Stocks, bonds and collective
funds are wise choices. So are football cards, coins,
antiques, gold and property. Business equipment is
also a good investment because you can use it to earn
more money.
Investing is more than just putting money aside for
the future. It involves taking steps to make money
grow. When you invest, your goal is to buy things
that will increase in value over a period of time.
However, investing almost always involves some risk
— there is never a guarantee your investment
will increase in value. But if you learn how to research
and select investments carefully and invest wisely
over a period of time, investing is a proven way to
increase wealth.
Overcoming the Fear Factor
The truth is, a lot of people — adults as well
as young people — are afraid to invest because
they don't know how. What's worse, they don't even
believe they can learn. But you may actually know
more about picking investments than you think.
Arthur Berg Bochner, a young person himself and author
of The Totally Awesome Money Book for Kids,
says teenagers are the best stock pickers in the world.
That's because teenagers have built-in "radar" for
products that are cool, hip, and in demand —
and they know which companies sell them.
Start paying a little more attention when you are
shopping or hanging out with friends. You don't have
to be a stockbroker to pick companies to consider
for investments. Just notice what kinds of products
your family and friends like and use.
Sizing Up the "Deal"
Once you find some companies you might like to invest
in, do you rush out and start buying shares? Not at
all! Experienced investors don't buy shares in companies
until they have done thorough research, considered
whether the price of the share is what they want to
pay and sized up the potential profit on the deal.
The most important thing you can do to reduce risk
in investing is to learn to do thorough research on
the investments you are considering. YoungBiz asked
teenagers who have attended our Smart Start to Money
courses what their favourite websites are for learning
about investing. The students' three favourite sites
were:
Look for Steady Growth
As you research potential investments, your goal should
be to find companies that have proven records of steady
growth. A company is considered to be a steady-growth
investment if it has steadily increased its net profit
15% per year for the past five years.
Want to learn more? Here are two great ways to develop
your skills
as a young investor:
- Join
the YoungBiz Teen Club, meet other young people
who are interested in investing, and take advantage
of our bulletin boards, blogs, online tutorials
and live chats. If you are not a member, click
here to join.
- Investing for Dummies by Tony Levene
is a fantastic resource book for beginning investors.
The user-friendly guide will help you learn more
about selecting potential investments and making
sound investment choices. You can order it through
the YoungBiz
Catalogue today.
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