Some investors who started young
If you think saving and investing are only for folks with gray hair, think again.
Legendary investor (and billionaire) Warren Buffett used to save every dime he earned from childhood jobs like delivering newspapers.
Even as a youngster, he would surprise people with his wise, and gutsy, decisions. Once, when he was 14, he pulled $1,200 out of his savings account to buy 40 acres of Nebraska farmland. You can read more about Mr. Buffett in "Buffett: The Making of an American Capitalist," by Roger Lowenstein (Random House, 1995).
But investors are not just famous people, or just grown-ups, either. Take Amanda Plumley and Eric Olson. Amanda is a junior at Alexander Hamilton High School in Milwaukee, Wis. Eric is a freshman at Bentley College in Waltham, Mass.
Both of them are learning as much as they can about investing.
Amanda was one of a small group of young people who signed up for a special summer class in investing and economics from the University of Wisconsin at Milwaukee.
At first, she wasn't sure if she would like the program. Then she realized, "Wow, this is interesting! It takes a lot of skill. And by learning how to save my money, I'm helping the economy."
Amanda also loves sports, she said in a telephone interview. She has been captain of her school's swim team and is an announcer at home basketball games. She likes science and math. Her dad teaches at her high school.
She was surprised at how much she enjoyed learning on her own about stocks, bonds, and money. People who know Amanda say she is developing very good investing skills.
Eric Olson who also likes math, had a similar discovery. "I was about 13 when I first got interested in finance," he says. In a way, it came naturally. His dad is a financial adviser. With some prodding from Dad, and some reading on his own, Eric began to learn about the stock market.
Eric especially likes "blue chip" stocks like General Electric. In fact, GE is the oldest company listed in the Dow Jones Industrial Average. The 30 companies in the "Dow" are chosen by the editors of The Wall Street Journal newspaper as a way to keep track of the stock market. The average used to be the average price of this chosen set of stocks. Today it's figured by adding up the share prices of the 30 companies and dividing by .2252.
What tips do Amanda and Eric have for other young people who want to learn about investing?
"Read everything you can on investing," Eric says. "And keep reading - books, magazine articles, the business pages of your newspaper." As you keep reading, the material will become easier and easier to understand, he says.
"Diversify," Amanda says. In other words, "if you put money in stocks, make sure you buy different types of companies." Buy some shares of an older factory company and those of a high-tech firm, for instance. Or buy shares in a company that makes products sold outside the United States. It's a cliche, but it's true, she says: Don't put all your financial eggs in one investment basket.
That way, if one of your stocks has a bad day, it won't drag down the value of your investments as much. You'll be somewhat protected.
Both young investors stress the importance of asking questions: Don't be afraid to ask questions of people who have a lot of investing experience, they say. They will probably be glad to give you advice. But when it comes to investing, you have to make the final decision, because it's your money, and you know what is best for you.
(c) Copyright 2001. The Christian Science Publishing Society