Learn to play the stock market without risking your wallet
Did you know that if you were to invest $10,000 today in the stock market with the guarantee of making only a 3 percent return profit on your money, in ten years that same $10,000 will be a little over $13,000?
At a 5 percent return profit, after those same ten years your original $10,000 investment would be worth about $15,500 and with an extremely reasonable 7 percent return profit, your $10,000 investment would double after about 11 years.
What does this mean to the average college student?
It means that the earlier we begin investing, the bigger our nest eggs can become in the future. If you are all like me, you all want to be retired by the age of 30. Because this clearly won’t happen for most, the steps we take now, during or soon after college, will greatly increase our chances of a comfortable future.
That being said, let’s look at reality. It has been a scary year for investors. The economy is in a slump and investments are not doing well. In the past 12 months, the Dow Jones Industrial Average, quoted most frequently to assess the state of the market, is down a whopping 14.69 percent. The NASDAQ, a fully digital trading system, is down 8.33 percent while the S&P 500, which tracks the movement of 500 of the largest companies, is down 14.05 percent.
Certainly, there have been those who have made money but overall, markets have not been investor friendly. To the timid or just beginning investor, guaranteed returns could be made in the form of a Certificate of Deposit (CD), which you can invest in at your local bank. In the same time period that the stock market is suffering, a one-year CD would yield a guaranteed 4.8 percent return profit.
For people who understand the idea that with more risk can come more reward, the stock market is a good place to invest their money, especially if they are going to invest long term.
What will happen in the coming year? Where are the best places to invest? How would your investment portfolio perform over the next few months if you were given $10,000 to invest today? Would you put all of your eggs in one basket or would you mix it up? I want to know what the student body would do as a whole, so I decided to devise a game.
Here are the rules:
1. Everyone has $10,000 to invest, with the end date being April 30, 2009.
2. You must invest all $10,000 in no more than four of the following categories: New York Stock Exchange tracking index, NASDAQ tracking index, S&P Depository Receipts, a one-year CD with an interest rate of 4.05% (remember, this is an annual rate, so your rate for the school year will be lower), any individual publicly traded stock of your choice with a provided stock symbol.
3. If you combine your investments, they will be weighted equally meaning if you invest in four categories, each will be worth $2,500.
4. Tracking of the portfolios will be done on a weekly basis, with the top-three performers listed in each column from now until the end of the game. I will use first name and last initial only.
5. Portfolio breakdowns must be e-mailed to gzahler@nevadasagebrush.com no later than September 9th to be part of the game.
Good luck and happy investing!
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on Monday, September 1st, 2008 at 11:00 pm and is filed under Perspectives.
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September 3rd, 2008 at 1:07 pm
$10k in QQQ