Day: February 17, 2020

Welcome to the Husky Investment Tournament!

It’s exciting to see new faces, as well as returning schools! We look forward to working with everyone and sharing valuable information about investing. Wherever life takes you after graduation, this knowledge will bid you well.

As young people, you have the most valuable asset on your side—time! Why is investing early so important? The answer is compound interest. $1,000 invested at 8 percent will grow to be $1,080 after one year. After two years, it will grow to $1,164.40 due to earning compound interest (you earn 8 percent on last year’s $80 in interest = $4.40 plus 8 percent on your $1,000 = $80).

That may not seem like a big deal, but consider a longer time period. What will your $1,000 grow to be in 55 years when you retire? The answer: $68,913.86. That’s right, your $1,000 will generate $67,913.86 in interest.

Want to be a millionaire? If you invest $1,117 each year for 55 years and earn 8 percent, you will have more than $1,000,000!

So, as you can see, investing when you are young is the first key to a secure retirement. 

The second key is the rate of return you earn. If you invest $1,117 each year for 55 years and earn one percent, you would only have $85,820.19. Which retirement would like to have—one with more than $1 million or one with less than $100,000?

Where can you earn an 8 percent return? In a savings account at a bank? In a Certificate of Deposit? Or in the stock market?

The College of Business at Michigan Technological University wants you to understand the basics of stock investing while you are young. People naturally avoid things they don’t understand. We want you to understand that investing isn’t as complex as it may appear. Only one team will finish in first place in this competition, but all of you can win in the retirement tournament.

This week’s video is from Dean Johnson, dean of the MTU College of Business. He provides an introduction into stocks and investing to help get you started, as well as an explanation of rules and trading restrictions. Good luck, and have fun!