A Brief Entry Into Stocks For College Students

Sebastian Alsina / Contributing Writer

Incoming college students struggle with basic financial literacy according to a survey conducted by the National Association of Student Financial Aid Administrations.

With the United States facing a global pandemic, investors have seen drastic financial difficulties that have led to an ever-growing confusion in the stock market.

“Buying and selling stock isn’t for the faint of heart, but it can be financially rewarding,” said Dr. Clark Wheatly, an FIU professor at the School of Accounting. “Just make sure to do your homework and get to know the company before you invest your money.”

The stock market is a good place for college students to start making investment decisions. For instance, the Dow Jones comprised of 30 large companies, experienced a nearly 40% drop earlier this year, only to recover nearly all of that by the end of August.

DOW Jones Industrial Average for the past six months

Many companies in the transportation sector are, however, still priced at a third of what they were selling for in February. As a result, this year experienced low numbers making it ideal for students to invest.

Starting with the absolute basics, a stock is a piece of ownership of a company. These “pieces” are known as shares amongst investors. The more shares, the higher the percentage of the company you own.

You can buy a share of a company from anywhere as low as a penny to thousands of dollars. Something that may be of appeal to FIU students is penny stocks since they allow people to invest in companies without risking major loss.

That being said, the yields can be big. So penny stocks are definitely worth looking into for aspiring investors. 

With some investors, companies, and markets carrying momentum better than ever before, many have jumped onto trading on wall street in order to ride out the rising economy.

Though some have felt the whiplash of this pandemic as some investors have lost money or have been bankrupt.

That being said, jumping into the world of stocks isn’t as easy as depositing a check at a bank. Though it shouldn’t scare you away. Here’s a rundown of the stock market and how to get you into trading

The reason companies sell shares is to gather funding which is brought by new ideas, products, and services. They will give partial ownership to shareholders.

A shareholder also referred to as a stockholder, is a person, company, or institution that owns at least one share of a company’s stock.

Shareholders are essentially putting their money in their mouth by buying shares. Buying stocks is having faith in a company and it’s board of directors to make the right decisions, which will inevitably bring the value of the stock higher and result in shareholders making money. 

Stocks are given values by evaluating a company’s infrastructure, capital (financial assets) and overall business model.

As you start buying stocks, you will create a portfolio, which is a simple way of saying “companies you have and are invested in”. Diverse portfolios are rather common, with investors putting their money in different companies to ensure that if one company starts to drop, it won’t financially ruin them.

Investing in another company can compensate for their investment assuming one stock tanks. “Don’t put all your eggs in one basket,” this is a common phrase tossed around investors.

That being said, how can you even buy stocks? Simple, if you go to your bank many of them will have investment accounts you can open with many being free of charge. Even Wells Fargo, FIU’s partnered bank, offers a “WellsTrade” account allowing students to create investor accounts with commission-free trading.

Many students have created a free trading account through WellsFargo by visiting their website and signing up. You can even walk into the bank and make inquiries about a trading portfolio.

Though let’s assume you don’t want to go through your bank. That’s fine. Applications like Robinhood, WeBull, ID America Trading, etc will allow you to open up without going through your bank.

Just look up your app of choice through your chosen App Store and follow the sign-up process on the app.

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