T Nation

Everything Finance- for College Kids


#1

Hey all,

Currently a finance major in college and looking to really expand my knowledge of real-world application as opposed to just the semi-useful theory I learn in class. I wanted to see what you guys recommend in the ways of books on finance, investing as a young college kid, etc. There are really no boundaries. List investment strategies, investments you think are solid in today's recovering economy, etc.

I am currently cranking out "The Intelligent Investor," which is pretty simple, yet a good reminder of simple financial techniques to apply in the stock market. I am heavily invested in Alcoa, Yum Brands,and a biomedical/pharmaceutical mid-cap, but also carry some speculative small caps. Seems to be a mixed market sentiment in terms of investing in small cap, mid cap, or lage cap for the foreseeable future.

Also, on a slightly seperate note, do any of you other collegiates currently make any online income? I have been trying to get into some form of extra "automated" type income, but don't know where to start.

Houston


#2

You do have an (Roth)IRA right? That one's a no-brainer. Don't double-dip by seperately investing too much into the same things as what's in that. I use a conservative growth mutual fund for mine. While you're young you can be biased toward higher risk investments. I'm split about 1/3 conservative, 2/3's international and other higher risk funds.

Just as you want to hedge your bets and diversify with investments, the reasons and logic you use to invest should also be considered. Research and study industry competition, external threats, substitutes, etc. to get a better understanding of what could happen to a company. Michael Porter is the foremost authority on this. http://en.wikipedia.org/wiki/Michael_Porter has a pretty good overview with links to his work. "Porter's Five Forces" is definitely worthwhile.


#3

Hello. I was an econ major in college and went through a similar learning curve. I was flat broke during end of 08 beginning of 09 but I really wanted to buy Citi and Ford..man I woulda made a killing.

Theres lots of good info online... but some times you just get information overload. I read Real Money by Jim Cramer, and I had a class in corporate finance..I still can learn more but I feel I understand the basics.

Maybe its my Economics background, but I take a top down view of investing. I look for ideas and industries that I feel are going to grow due to the macro/global outlook. Basic consumer habits are a good preface of research for this. Think of how many people you know that now have Iphones or smartphones right...obviously technology like this is not going away. Or similarly, look at how much natural gas we have, how it carries less CO2 emissions, and compare that with the price of oil. Furthermore, why would companies like Exxon aquire nat gas heavy outfits like XTO.

THEN, you look at the metrics/ the PEG, and DEBT/ FREE CASH (If you find any company with very low debt and high free cash, thats ALWAYS a good thing) etc to find out if something is worth buying.

I think small caps are great for younger people such as ourselves because you have YOUR WHOLE LIFE TO WORK and make money back. However, putting a grand on a small cap that you have researched enough could turn your money into a whole lot more in a short amount of time. What I like to do for small caps is get ideas from the various sites out there, Motley Fool, Mad Money, magazines etc... and then research them (with the big picture in mind) and look at their ratios. An example of this would be the stock ZAGG. ZAGG makes protective covers for iphones and the like. Consider people are buying alot more smart phones now, smart phones are expensive so they are likely giong to protect their purchase. ZAGG has very few competitors which means good market share....then look at the financials.

FWIW, My portfolio hasnt been around that long to really show the gains I think I will have. There are much more knowledgeable people for this on the site than myself as well.

PS: Do start up your ROTH IRA, its never too early to save for retirement.


#4

The Roth-IRA seemed like a good idea, but multiple people actually told me that while I don't have a professional salary (I have a part time paid hourly position), my money would be better put to use to just unload into my stock account. Then, once it has accumulated some size, invest. My guess is, that since I'm not making enough, it defeats the purpose of having a tax-defensive investment (not much income taxed). Any thoughts on this?

Also, any point to a savings account at this point? Interest rates are nill. All I have is my ameritrade account (place to park money and make some cash long-term) and checking account (daily use).

Advice appreciated.


#5

I'm interested


#6

The point of a Roth is that it uses post tax income, in theory your tax rates will be higher as you age and make more money. Thus, since your income was already taxed, it grows and compounds tax free and you are not taxed when you withdraw for retirement.

Savings accounts are pointless. you will get very little yield on those or CD's, and the rate of return is actually negative when you account for inflation. Thank artifically low interest rates but thats another story.

Invest your money, youll make money your whole life, you can afford to be riskier at your age.


#7

Extra online income anyone??


#8

Good thread, I'm reading (graduating econ major here).


#9

Security Analysis.


#10

The purpose of utilizing a savings account now may not make much 'financial' sense, but it does make a lot of sense when looked at through the perspective of your long term goals. By saving frequently and setting solid boundaries around what those funds are for, you're creating habits for yourself that will serve you far more than any interest could.

What use is earning 25% interest if you keep pulling money out of savings to pay for things you want NOW, or poor planning, or any financial emergency?

I suspect you'll learn a fair amount about managing investments and those types of things - which are useful and an area that few people truly understand, even fewer experience lots of success with. But overlooking the discipline of growing and protecting your own contributions from your biggest enemy (yourself) would nullify all of that.

Good luck!


#11

Completely wrong, at least for the Roth. The tax advantages for the roth come on the withdrawal so it makes no difference what kind of income you have right now as far as a current tax break goes. You can't go back and invest more for the years you failed to contribute, once tax day comes that opportunity is gone forever, so I'd be sure to put anything investment wise into a Roth before anything else.

Liquidity in the case of emergencies. Keep a certain number of months worth of expenses in a savings or money market account in case of a major expense or job loss. How many months worth of expenses you need to keep is directly related to your job security.


#12

Ok, definitely going to get going on the Roth IRA then. Anything else I need to know about this or is it pretty straight forward?

Thanks all.


#13


#14

lol unemployment numbers are coming out tommorrow.


#15

Pretty straight forward. Just make sure you have all of your basic needs covered before investing so that you don't have to ever take an early withdrawal and pay a penalty. You can put in up to $5k a year but can't touch it until you're 59 1/2.

I'd suggest going through vanguard and just starting with one of the target retirement funds. You have all kinds of investment options with an IRA so ultimately it just depends on your risk tolerance but I really prefer index funds for my retirement accounts and you really can't beat Vanguard when it comes to index funds.