Invest Ed Students Tracking and Researching the Stock Market Madison Kysela, 11th grade Ms. Mathis, FACS Adult and Family Living Southmoore High School Cleveland County Central Region FALL 2011
Growing up in a single parent family has been very and stressful moneywise. Not knowing how my mom does it made me want to learn about how to manage my money. When starting our Invest Ed project I had no idea how much you have to do to manage your money and stay on top of things. After high school I plan on attending a community college and going to hair school which is definitely not cheap. I will be paying for my classes, my books, my tuition, and all the items I will need to attend hair school. I will be paying for all of this on my own, so I m very appreciative that we did this project so I know how to manage my money and can start doing this now. When beginning my researching process I searched for companies that I knew very well. I went to Google and researched the many companies that I am familiar with such as Apple, Google, Exxon Mobile, and Amazon to name a few. I tried to think of products that would most likely increase in profit in the amount of time we were doing this project. While researching I found out there are so many different companies and ways to invest your money. Not only did I just use the companies that I thought of myself, but I found many new companies and products I have never heard of before. I wanted to think outside of the box and not invest in the same companies as everyone else; I wanted to try to keep mine different and original. When deciding what stocks I wanted to buy, I tried to think of products that were fairly new and looked like they had potential and room to grow. I didn t want to buy any companies that had products that were already very popular because they probably don t have as much room to grow and people might lose interest. Most of my companies are new and on the rise. 1
One of my stocks that did fairly well during the whole project was Apple. Apple is a multinational corporation that creates consumer electronics, computer software, and commercial servers. Founders Steve Jobs and Steve Wozniak effectively created the Apple Computer on April 1, 1976. For more than two decades Apple was predominately a manufacturer of personal computers. Apple faced rocky sales and low market share during the 1990 s. Now Apple has established itself as a leader in the consumer electronics industry, dropping Computer from its name. The latest era in Apple products began in the ios range of products that began with the iphone, IPod Touch, and now the IPad. As of 2011 Apple is the largest technology firm in the world with annual revenues of more than $60 billion. During this project I bought and sold plenty of stocks. When selling stocks, I had to decide which stocks weren t doing so well. I sold by PEPSICO stock for $60.25, and I had 250 shares of it. The company started out doing well at the beginning of the project, but by the time I decided to look into buying and selling stocks PEPSICO was not doing well at all. With the money I got in return from my PEPSICO stock, I bought 20 additional stocks in Apple. The price per share for Apple at that time was $404.88. After buying the additional stocks, I owned 350 shares in Apple. When deciding how much of a risk taker, I took a test online to evaluate how much risk I can handle. After taking the risk assessment test, I found that I have a below average tolerance for risk. I like to know what I am doing and know what the outcome will be. I don t like surprises, and I don t like to risk my money for things that have the potential to go wrong. When assessing my risk taking results and my portfolio results, I saw that if 2
I had taken more risks in buying stocks then my results would be much lower than my results are now. Before this project I didn t have any short term goals because I had no idea what I was doing. But now after learning some things and doing the Invest Ed project, I ve learned there are many different ways I can invest and save my money. Living in a single parent family, it s not easy getting by; we live pay check to pay check. A current short term goal is to save enough money that I can start college right after graduating from high school. Because I am the oldest child in my family, it is going to be a struggle to pay for my college. I want to get a job within the next few months so I can begin to save for things I will need when I graduate. I also want to make sure I have a great way to invest my money. Fraud is unfortunately a very serious concern for all Americans. Everyday people get their identity stolen and then end up so far in debt that will never get themselves out of it. The elderly are especially at risk to be taken advantage of. If an investor tells you that you will get an abnormally high return, it is probably too good to be true. There are several red flags we should look for to avoid fraud. You should always ask for statements on what the investor is doing with your money. After all it is your money; you can do with it whatever you want. Additional tips are: keep your personal information in a safe place, change passwords frequently, be sure to check your credit score and history for discrepancies, and above all stay educated on the topic of smart money management. Also you can get your identity stolen by fraudulent people calling your house and asking for your social security number over the phone. If someone does ask you for your social over the phone, you should hang up and then call the company back to make sure it was really them that just called. I was amazed to learn about 3
all the ways fraudulent people can take advantage of us. I will be so much more careful with my money after learning about the topic of fraud. Before learning about diversification I had no idea what it meant, but now I know that diversification is the practice of spreading out your money or investments. It is the most essential tool to people who want to invest. When you have money to buy stocks, you don t want to put all your money in one company or the same type of companies; you want to invest in companies that have room to grow. You don t want to buy a stock that would depreciate in value. Depreciate is when the value is lowered. Also, when you earn money from stocks you want to spread it out in different accounts or funds. The reason you should diversify is to reduce the risk in something going wrong and your not having any money. Normally younger people have the time to take more risks rather than people who are older in age. If you keep all your money in one spot, you re setting yourself up for a potentially huge loss. When diversifying your money, you are spreading your money out and reducing yourself from having that huge loss. When this project began, I heard words such as commission, diversification, interest, face value, dividend, and manipulation. I was confused beyond belief; I had no idea what I was getting myself into. I learned that diversification is spreading out your money and investments. Interest is the charge for the privilege of borrowing money. Face value is the value or dollar value of a security stated by the issuer. Dividend is a portion of a company s earnings decided by the board of directors. And manipulation is the act of artificially inflating or deflating the price of a security. It s hard to believe I now know and can apply these terms and many others. 4
Due to this project my views on how I manage money and how I want to manage my money have changed tremendously. I used not really to care; I just let my mom handle it all and do whatever she was doing; but now I talk to her about what she is doing to help her out. Once I get a job, I want to save a set amount of each pay check and put it in a savings account. When deciding how to invest and save my money, I will not put a lot of effort into my decisions. Money is a huge part of everyone s lives, and at the end of the day I want to be at ease knowing I have my money in good places and am saving a good amount each month for emergencies and future plans. As far as the market goes, it really just depends on the time of year and how the economy is doing. You can be doing really well one day, and then the next day you could be down a couple hundred dollars. The economy and the stock market go hand in hand. If the economy is down or in a recession, then you probably won t be doing too well; but if the economy and stock market are doing well, then you will be earning yourself money. When investing in stocks, you are taking a risk with your money and trying to earn yourself more. If you invest in a bad time, then you will more than likely end up losing more of your money than you are earning. When starting this project, I really didn t see any point in doing it. I had no interest in dealing with stocks, investments, or money in general for that matter. But now after many weeks of learning and watching what my stocks have done, I ve learned that investments and dealing with your money in smart ways are very important in today s society. I ve learned that in the future I want to continue learning about different ways to deal with my money and my investments. I want to make sure I keep all my earnings and savings in good places that will always be earning interest. 5
As for my future investment goals, I plan on saving for a new car and hopefully getting my own apartment. For now I have an older vehicle with issues, and I would love to be able to afford a 2009 Toyota FJ Cruiser. I don t want to get a new car until I m out of high school and have completed my first couple of years of college. I plan on paying for it myself and having the title in my name. This would be a huge step in my life, and I m starting to save now so I can take it. As for my own apartment, I plan to have roommates to split the cost with me. We will have to pay for many things such as gas, water, electric, groceries, and everyday necessities. Not many kids can say they want to buy their own car and get their own apartment all on their own, but I do. I want to know I earned it myself to prove to myself and to my parents that I can be independent. During this Invest Ed project I have learned so much, so much that I never would have learned if it wasn t for this class. I have really tried to pay attention and apply myself so I can be prepared for the real world outside of high school. I don t want to just go by in life and not really know how to handle my money. Due to the Invest Ed project I have so much more knowledge on smart investing. Invest Ed has been the beginning of my journey to being a smart investor. 6