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Why You Should Begin Investing Now

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October 27, 2013 – Comments (0) | RELATED TICKERS: CMG , AAPL , NFLX

I started investing at the ripe age of twelve years old, but had a lull in my uber-intense investing interest for several years as I entered college and experienced the whirlwinds of young adulthood. Plus, I had to catch up on episodes of Lost, The Office, and other fine arts. In all seriousness, I have always been interested in the process of entrepreneurship and investing and thankfully have thrived in a college environment that continues to cultivate those interests. I began seriously investing in stocks in 2006 and 2007, of course; perfect timing to experience what I call the “sledding effect:” a one-way roller coaster to the depths of market levels. 

My investing interest renaissance as of late has helped reaffirm why I see teenagers, college students, and young adults as natural investors, if they would only realize it. Part of why I admire David and Tom Gardner, and their efforts to start the Motley Fool, is because they were looking to share simple investing knowledge and advice that is not taught in a high school or college classroom. I am in the process of completing my bachelor’s degree in Business Administration, and not one of my courses has offered the slightest tidbit into how you can start investing on your own. Keen students could certainly begin to deduct a path to pursue individual investing, but very little is done in the classroom to show how attainable (and down to earth) investing can be. 

Young adults, whether in high school or college, are the cutting edge consumers. They popularized those incredible RAZR phones. They jumped on each new iPod. They opened the doors to the possibility of binge-watching TV shows through Netflix’s video streaming service. In short, they are the innovative customers of the future, and they don’t mind exploring and taking risks with new products that eventually are often embraced by wider society. These new products and services can range from iPods to a restaurant that builds burritos and tacos through an assembly line process. Now, imagine if these young adults went beyond the consumer mentality and began evaluating the businesses behind those products as potential investment opportunities. 

Investing in what you know equates to buying what you know. People research a product and will buy what they know, what they enjoy, and what they appreciate. Investing should be practiced the same way, especially for individual investors who do not have the time or interest to sustain ongoing searches for the latest nanotechnology startup story in a developing nation. Investing becomes all the more natural when you invest in companies whose products and servicesyou use and appreciate.

Many investing success stories come from businesses who offer a product which appeals to the younger generation. Netflix, Apple, Chipotle… these are names that nearly every student will intimately know, even if they do not directly use the product. Is it any wonder, then, that those businesses have often been terrific long-term investments? Netflix, Apple, and Chipotle represent solid investments of the past several years, even if an investor purchased them before the 2008 recession.

From January 1, 2008, to today, Netflix increased in value by 1100%. Apple increased by 160%. Chipotle Mexican Grill increased by 242%. Remember, the timeline of these returns includes what is considered to be the worst economic slump since the Great Depression. Not bad for the five year returns of businesses which have become household names today, especially so for those under the age of 25. 

For individual investors, and especially the younger generation, start (or amplify) your investing journey by evaluating businesses you know, love, and where you or your friends allocate your minimal consumer dollars when you get the chance. If you like a product, you may very well want to be an owner in the company behind the product. Oftentimes, the greatest investments are right in front of us in our day-to-day lives. 

Best,
David K

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