At age 11, Kristian Horneland wanted to understand his father better. His dad was a big business guy, so Horneland started to read magazines such as Forbes and newspapers like The Wall Street Journal to get a better understanding of what he did for a living. Little did Horneland know, these big business guides hooked him on investing.
Since the Sept. 11 terrorist attacks, the economy has been discussed repeatedly in the media. Yet, many students don’t understand how the stock market works or how to start investing like Horneland did.
Horneland said there is a five-step basic guide on how to start investing. First, he said, saving was important.
“First start saving,” he said, “Budget all your expenses out and figure out a way to save and try to figure out a regular interval of it.”Horneland also said to try to figure out what students want out of investing.
“Second, save regularly and save to figure out when you are going to need the money again and what you want the money for,” Horneland said.
The next step: researching.
“Read a Business Week or Investing for Dummies, whatever suits you,” he said. “Then go online and pick the one that is best for you.”
When researching is done Horneland suggests getting a broad and safe fund, like a mutual fund. A mutual fund is an investment company that, by sale of its shares, acquires funds to invest in diversified securities.
Horneland said a mutual fund is managed by trained professionals who specialize in portfolios, stocks, bonds and real estate.
To invest in a mutual fund, Horneland said the entrance fee is around $200.
The last step is to just sit back and wait. Horneland, a senior, is now 21 and isn’t really investing anymore. Instead he is trading. He feels that students should wait awhile before investing.
“Because the economy is very unstable, wait about three to six months,” he said. “You’ll still do just as well, and wait and see, be cautious.”
While this is just a simple guide for students to get an idea on how to invest, there are other ways to invest as well. For example, the World Wide Web has numerous sites to help, such as cnbc.com or TheStreet.com.
What about recession? How will the money invested be affected by Sept. 11?
Michael Loewy, USF economics professor, said it could be awhile before the country will know for sure if it’s in recession.
“The problem with recession is that you don’t know until you’ve been there awhile,” Loewy said.
Loewy said the gross domestic product, which is the total market value of the goods and services produced by a nation’s economy during a specific period of time, is measured every quarter. The third quarter just ended and the results will not show for a while.
“It may be three months, until March, or a year until we know if we are in recession,” Loewy said.
“Even then we may be already out of it.”Loewy said the second quarter showed the GDP increasing, but by the third quarter it could show a decrease.
Ed Ford, another USF economics professor, agrees with Loewy.
“It’s still a little bit early and not much has changed,” Ford said.Ford explained that the decline in consumer confidence means that they spend less. This means the economy goes further and further into recession, but there can be offsets.
“The possible offsets are that the Federal Reserve just cut interest rates,” Ford said. “This encourages consumers and businesses to borrow.”
Ford said that the increase in defense spending would increase the economy.
“That, plus the spending on military goods and new security devices, may offset the consumer decline.”
As a whole, Ford said he thinks the economy will have trouble getting out of recession and instead move further into recession.Students can contribute more than just investing in the economy.
Loewy said the act of getting a higher education helps stimulate the economy.
Loewy said it’s not so much investing, but being all you can be.”Its not so much buying stocks and bonds,” Loewy said. “But investing in yourself.”