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What to Do Now So You’re Not Broke in the Future

Written by Harsh Chahal

Whether you want to go to college, buy a new car or get a mortgage, you need some dinero. A lot of students believe that solely getting a job will help you achieve these goals, but a job is only part of the financial success equation.

As a high school student, I never knew what I liked or what I wanted to do in the future. One day, in accounting class, my teacher gave a lesson on investments and from there I began to grow a strong interest in personal finance.

I’m still in high school BTW.

Over the last few years, I started noticing other students were interested in finance but didn’t have the courage to start investing or became overwhelmed by the whole idea. This encouraged me to start writing a book on investing geared specifically for teenagers.

A portion of the book is based on developing habits. We all have habits even if we may never notice them being there (i.e. waiting until two hours before an exam to start studying, stress eating chips etc.)

Building good financial habits is the path to ensure you’ll have the money you need, when you need it. Here’s what’s working for me:

A Course of Action

I would constantly get confused with all the different ways I could invest my money from stocks, bonds, mutual funds and even crypto currencies. Investing may not be a walk in the park, but it isn’t rocket science either. Before doing anything, you must make a PLAN.

Begin by setting a goal for yourself such as: I want to save $500,000 by the time I’m 75, or I want a certain amount of return on my investments before retirement. Next, choose an investment strategy that will help you achieve your goals.

After reading various investment books ranging from stocks, bonds and mutual funds, I began to see a similar strategy mentioned in each book: If you are saving for long-term goals, you might choose a more low-risk investment, or a more aggressive high-risk investment for your short-term goals. Over time, as you become a more experienced investor, you can start researching more advanced strategies from experts like George Soros, Carl Icahn and the notorious Warren Buffett.

Be a Super Saver

Most people, including myself, have a careless need for spending money on things we don’t really need like glow in the dark tape. Why did I buy so much?

Anyway, saving money is worth the effort. Getting into the habit of saving gives you peace of mind and options. Get comfortable with preparing a budget. Use an online tool like CIBC’s student budget calculator. This will help you identify potential areas for reducing expenses and ensure you know where your money is being spent. The money left over can be saved.

The temptation to spend money on clothes or a new phone may be strong, but those ‘wants’ will be replaced with newer wants. Savings will help you achieve your goals and generate greater returns.

Put Your Financial Eggs into Different Baskets

We are all looking for that one stock that will make us millions of dollars in the future, but that is highly unlikely and extremely risky. Have you heard the saying, “Diversify your investments?”

Diversification is just a fancy way of saying “Don’t put all your eggs in one basket.” When you diversify your portfolio, you hold many different investments (i.e. stocks, bonds, mutual funds) to spread the risk.

A significant loss in any one investment doesn’t destroy your entire portfolio. More importantly, it ensures that in the event of a loss, you retain at least some capital to make future investments – and hopefully recover what you lost. Both upside and downside potential is reduced when diversifying and it allows for a more consistent performance to your portfolio.

Learn from the Experts

Most students would rather spend time on social media than read a book, but getting into the habit of reading is very important when it comes to the world of investing. Some books that helped me in my quest to understand this stuff are Thinking, Fast and Slow by Daniel Kahneman and Timing the Trade by Tom O’Brien.

Both books give helpful advice on when to invest and how to evaluate your investments (find out if they’re doing well or not).

The Long Game

Dedication is what brings all the other habits together. As an investor, you can never let your money stay “still.” Investing regularly and on a consistent plan will keep your returns strong while keeping you in the game and caught up with the latest trends.

Always review your portfolio and stay updated with your investments to ensure it continues to align with your goals. In investing and in every worthwhile endeavour in life, consistency breeds habit, and habit breeds success.

Wait! Practice with Fake Money First

Some of us need practice before investing for real. I recommend signing up for an online stock simulator. They let you trade stocks using artificial money. Kind of of like learning about the real estate market by playing Monopoly.

I began investing through a simulator, but I would always be losing money instead of making it. So, I decided to develop various habits I would follow to help build a profitable portfolio. After researching and hours of practice investing, I started honing these five habits and they brought great returns to my portfolio and my understanding.

My goal is to earn enough money from my investments to help my parents with my university tuition. Overall, I believe following these five simple habits will help you navigate the complex world of investing just as they helped me.

*Opinions expressed are those of the author, and not necessarily those of Student Life Network or their partners.