Grace Bonomo

The Young Investor

The four experts seem very different, yet similar in their approach to investing. Each expert is

very confident in their direction for the young (or old) investors. Whether it is investing in

companies, mutual funds, stocks, or something else, these experts feel their approach is the best,

one which has been a successful strategy for them. They come from different walks of life and

each managing portfolios which have provided them with positive, and likely some negative

returns.

For the young investor, the majority of the investment professionals in the articles we read

have the same beginning principal and that is to make sure you pay off your debt first. Better

yet, don’t get into debt in the first place, is my thought. Second, they all consider the long-term

perspective, which means don’t look for the quick return or money to be made, look at it over a

longer number of years. The market or something you invest in usually stands the test of time,

being worth more money the longer time you have that investment. Two of the investors, Suze

Orman and Dave Ramsey, suggest investing a particular amount. Orman says to choose a

number and invest at least that every month. Ramsey thinks that 15% of your earnings are a fair

amount to invest to get to where you need to be, if started young. All believe to not waste your

young years not investing; start early to achieve your goals.

Orman says it is important to not put your eggs in one basket. When starting out, don’t just

buy one stock, by a no- load mutual fund. It is the easiest way to diversify your portfolio. She

recommended to put the same amount in every month, so you can have a few of these types of

mutual funds and when the market is up, you buy less shares, when it is down you buy more and

in the end you should come out ahead. Ramsey has a similar mindset with investing 15% of
your income in a growth stock mutual fund. Look at the long term and watch your money grow.

Both say to watch your fees.

Jim Cramer things it is wasteful to save your money in a standard savings account, instead it

should be invested in the market. At a young age, Cramer says you can take greater risks and

have an account which is more aggressive. He also thinks it is never too early to save for

retirement and suggests a Roth IRA, which is contributions after taxes, is the way to go.

Warren Buffet thinks one should not consider to invest in just part of a company, a small

piece, for instance because it is a good value, but you should consider the entire company when

investing in the stock. What is the history of the company and does it make sound financial

decisions? Is the management strong? Focus on the return of equity not on the cost of the share.

Buffet also thinks an investor should have a portfolio of companies that they are investing in and

once again, the investor should start young.

Personally, when I think of what I would invest in, I think I would research the stock I wanted

to invest in and look at the company as a whole. I would see how they were performing, how

well they treated their employees and if their product or business could be profitable for years to

come. Maybe I would look into a mutual fund, researching like I stated above, and investing the

equivalent to one paycheck a month into that account. I like Orman’s thoughts about investing

that way with the mutual funds because they do the work and the thinking for you, you just have

to pick the right ones. I also like Buffet’s thinking about looking at the entire company as a

whole so you become familiar with whom you are investing and can make a bit of an informed

decision. So to start, I will take $500 and make a purchase of a mutual fund and devote $15 a

week into the account, to start investing in my future.

 I am new to investing, like most people my age, and I don’t really understand the methods

yet, but I think with more reading, and testing out some of these approaches, I will become more

interested and excited about the market and my investments. I worry that when the market goes

down, I will be scared to lose my money, but these professionals all say to consider the long

term, so I will do my best to think outside the box and begin to save for my future.