As recent graduates of Baldwin Wallace University, Ryan Rivera ’23, MBA ’24, and Dane McNulty ’24 have valuable insights to share about the power of investing. In a world where investing apps and social media advice have fueled a surge in young investors, Ryan and Dane have learned real-world lessons that they believe can lead to financial freedom.
The Investment Club: A Hands-On Approach to Learning
Ryan and Dane have been immersed in the world of investing throughout their time at Baldwin Wallace University. As finance majors, they have gained hands-on experience managing real capital, thanks to their involvement in the university’s Investment Club. This student-led club has successfully guided the growth of a portfolio from a modest start of $150,000 in 2006 to an impressive $1.2 million today. Using the same Bloomberg Terminal databases relied upon by Wall Street traders, Ryan and Dane employ careful research and strategic decision-making to achieve these remarkable results.
The Investment Club meetings attract students from various disciplines, reflecting the increasing encouragement for young people to invest in their future. The message to start building a nest egg is everywhere, from parents emphasizing the importance of retirement savings to the convenience of mobile investing apps that make buying stocks, bonds, and funds easier than ever.
The Viral Influence of Social Media and Unicorn Investments
The rise of social media platforms like Reddit, TikTok, and X has heightened the enthusiasm for investing among Ryan and Dane’s peers. Investment success stories go viral, showcasing massive returns from risky bets on “meme stocks” or cryptocurrencies. This phenomenon creates pressure for young investors to chase the next hot opportunity.
Ryan and Dane understand the temptation to capitalize on these “unicorn” stocks. They share a personal experience from the Investment Club’s decision to invest early in artificial intelligence chipmaker Nvidia. The return on this investment has exceeded 15,000% as the demand for AI continues to soar. Through a carefully executed covered call strategy, the club has even been paid to own the stock due to their early investment. However, Ryan and Dane acknowledge that such extraordinary returns are the exception, not the norm.
Taking a Balanced and Long-Term Approach
Investing at a young age brings both advantages and disadvantages. On one hand, the power of compounding allows even modest investments to grow into significant nest eggs over decades. On the other hand, lack of experience and a high appetite for risk can lead to costly mistakes.
Ryan and Dane encourage young investors to adopt a balanced and long-term approach. They offer the following tips:
- Start by investing in diversified funds that track the overall market until you gain more experience.
- Create an emergency fund with 3-6 months’ worth of expenses in cash or cash equivalents to avoid selling investments during market downturns.
- Contribute to tax-advantaged accounts like a 401(k) or Roth IRA as soon as possible to maximize long-term growth.
- Develop a strategy to incrementally increase your stock allocation as you become more comfortable with risk. As retirement approaches, gradually reduce your exposure to risk.
- Be cautious of blindly following viral social media advice and instead conduct your own research from reputable sources.
In essence, building a nest egg is never easier than when you’re young. By prioritizing investing now, even if it’s just setting aside a few dollars here and there, you can harness the power of compounding for a prosperous future.
About the Authors:
Dane McNulty ’24 is a recent finance and accounting graduate who was also the president of the BW Investment Club. Following his graduation in May, Dane has accepted a full-time position as an investment banking analyst. He plans to utilize the investing knowledge he gained at Baldwin Wallace University to excel in his new role.
Ryan Rivera ’23, MBA ’24, is a business analytics MBA graduate with a deep passion for finance. He has honed his skills through internships and involvement in extracurricular activities such as the Investment Club. Ryan’s dedication to his craft was recognized when he emerged as the winner of the prestigious 2024 ACG Cup. He aspires to pursue a career in investment banking, leveraging his financial modeling and analytical capabilities to contribute to successful deal execution.
