University student uses spare time for investing

by Shannon Seppala

While most students fill their spare time with sleeping and slurping beers, Lucas Schaan is busy researching the stock market.
Starting two years ago as a freshman in Carlson School of Management’s undergraduate finance program, Schaan began investing his own spare change as a hobby. He started by purchasing some dotcom stocks and experienced some success.
“I had some extra money laying around and started investing as a hobby,” Schaan said.
Although student investors like Schaan are few, there is an increasing trend of the young student population investing its money in the stock market.
Rick Nelson, director of undergraduate finance in the Carlson School, said there are a number of reasons for the increase in student investors.
The increased availability of stock and company information on the Internet reduces the amount of time an investor must spend researching. The booming economy is an additional incentive.
The influx of successful technology firms like Microsoft, Dell and IBM have given investors lucrative opportunities to invest and do well without requiring financial savvy.
In 1998 alone, the NASDAQ — the global electronic stock market index — finished more than 44 percent higher than the previous year.
The addition of the Roth IRA Fund to investors’ options in 1998 also fueled the expansion of novice investors.
The fund, which allows a $2,000 investment per year, taxes the money invested into the account up front. But no additional taxes can be levied when the investor removes money from the account, allowing greater long-term accumulation.
Nelson said the key to smart investing is having a long-term focus.
“Start small and get in the habit of regularly investing each month,” he said.
Low-cost funds that have small start-up fees can also be a good avenue to build a foundation.
“You definitely need discipline to save money and have a long-term horizon,” Nelson said.
A number of different companies offer online investment consulting and options with low startup fees.
Etrade, Ameritrade, American Express, and Morgan Stanley Dean Witter all offer comprehensive online sites for potential investors.
Mark Cheeley, a financial advisor for American Express Financial Group, says the best way to start an investment portfolio is by purchasing a mutual fund that can give consistent, more conservative returns.
And for someone with a more risky appetite looking to accumulate large returns, purchasing funds that focus on a technology sector could prove to be a worthwhile investment.
Schaan agrees that investors need a long-term mindset to be successful. By taking extra time to become informed about the industry, a novice can improve their odds of turning a profit.
He suggests reading financial literature such as guides to personal investing and financial publications.
Schaan said it takes a good amount of effort and interest to become successful. “You have to take it upon yourself to learn and become educated.”

Shannon Seppala welcomes comments at [email protected]