BHHS Today

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Editor Column: The Power of Investing

Whether one is an engineer or doctor or an architect or teacher, the importance of managing money properly, and the security that comes with it, remains a solid fact.

 

In our world today though, learning how to handle money to many seems like navigating a complex realm of confusion.

 

With banks and financial advisers, as well as a myriad of services, constantly vying for people’s money to manage, the constant task of steering through the world of money seems quite daunting.

 

As a high school senior, I am young in my career of managing money. Despite this fact, though, I have witnessed the power of a simple thing that can dramatically solidify one’s prospects of financial stability and security throughout life.

 

Many people feel that investing is complex and dangerous. People frequently ask themselves, “Should I let a bank invest my money, or should I open an account and do it myself?,” or “Am I going to lose much of what I have worked for if the market crashes?”

 

The truth is that much of the fear associated with investing is not necessary. Of course, the market can fluctuate some, but investing has maintained a proven track record of success, should one stick to a plan and remain calm.

 

Especially for students around my age, investing truly holds limitless potential. Given the long time horizon of teenagers and the enormous benefits of compounding, only $1,000 invested in stocks with an appreciation of ten percent per year, considered the historical standard for the market, would yield over $117,000 after 50 years, when most of us would be in our sixties.

 

True, the market will have endured pain throughout this time period. It may surge 30 percent one year and plunge 25 the next. But over time, on average, it is quite likely to produce exciting results. From historical figures, investing just $1,000 in 1980 in the S&P 500, a common index of American stocks, would have yielded about $76,000 by 2018 (a 38-year period).

 

The best part is that it is very easy to immerse oneself in the power of the markets immediately. Setting aside financial advisers and other high-cost methods, with the presence of technology and the Internet, numerous low-cost, safe options exist.

 

In particular, one of the best ways to be exposed to the market is through exchange-traded funds, or ETFs for short. By investing in a particular fund with a proven track record that is professionally-managed, one is assuming a lower level of risk and is gaining access to the returns of thousands of companies.

 

While there are a number of potential ETF selections, sticking to the simple options remains a successful strategy promoted by numerous investing legends, including Warren Buffett, Chairman and CEO of Berkshire Hathaway.

 

There are many places to start, although I would encourage one to look to popular funds, including such options as the Vanguard S&P 500 ETF (VOO), that have been proven to deliver over the course of the long-term.

 

The important thing to remember is, regardless of where one invests or what they invest in, that the prevailing strategy remains to invest for the long-term; this means putting money away and sticking to the initial plan. Even if the market falls, it will rise to a new record high before long.

 

As members of an ever-changing society, the need for financial security remains paramount, and regardless of age, investing can act as a powerful tool to ensure stability for years to come.

About the Writer
Evan Stern, Editor-in-Chief

Hi, my name is Evan Stern and I am an Editor-in-Chief on the Hawkeye newspaper. I am a senior this year and this is also my 4th year on staff. Outside...

1 Comment

One Response to “Editor Column: The Power of Investing”

  1. James D Forner on February 25th, 2019 6:38 pm

    Hi Evan,

    Enjoyed reading your article ‘The Power of Investing.’ I am a Freshman at BHHS and was wondering if you could help me get started investing? I could meet you anytime your available? Have a great day!

    Thank you,
    James Forner

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Editor Column: The Power of Investing