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Miya Mathur, Bethany Elementary Fifth Grade
First Place Essay: SIFMA Foundation’s National Elementary Division InvestWrite® Competition
Read more in Headline News.
Have you struggled to purchase stocks, funds, and bonds because you had no clue where to start? People around the world are constantly checking on investment deals. But, why are investments so important in the first place? To start with, investments are a great way to save money and earn more. Even before thinking about investing, there are some basic things you need to know.
One of the first factors to know is if the price of what you are planning to invest in is stable and lined up with your investment goal. For example, if your target is to have daily growth on your stock, you need to purchase something that has a good reputation for growing consistently. Another piece of information you need to know is the level of risk for losing money associated with what you are investing in. A bond has a lower risk than a stock. Some of the low-risk investments are savings accounts, savings bonds, and CDs. Some high-risk investments are stocks and collectibles. It is always good to spread your money into multiple directions and not all in one because it lowers the probability of loss. Furthermore, you need to consider whether the stock is strong in the industry or not. You know a stock is strong if it has consistent growth and positive recognition by the market. You can check this by going to the stock’s charts to see if it has been growing. If the stock is not strong, it will easily drop down in price and you will lose capital. A cardinal thing to know is that you should NEVER jump into the market with zero amount of knowledge in your hand.
Taking advice from informed people you trust can be a great way to receive tips about what to invest in and how much money to invest. Also, it is beneficial to have various ways to invest and not just one. Having a plan or goal ahead of time can help you organize your investment ideas. Your objective can also help you earn more money and lose less.
Based on this information, I think that the best things to invest in are mutual funds and stocks. I think this is a great combination because I am balancing my money to make sure I won’t lose drastically. My research indicates that there is a low risk for mutual funds and a medium risk for stocks. Through a game of rolling dice as part of the fifth-grade PACE curriculum, I figured out that the chances of gaining money yearly is three times greater than the chances of losing money when investing in a combination of mutual funds and stocks. This results in an outcome of gaining more income. On the other hand, if you had invested in a higher risk investment, there is a greater chance of losing a lot of money. Though it is good to take a chance, we need to be aware of the consequences for being overly ambitious. Noting information that you have learned in past experiences can help you prepare for upcoming investment deals.
In The Stock Market Game, I learned a lot throughout the journey. A concept I learned is that you must take a risk to actually learn. My group took a risk of making a big purchase and it paid off. We earned a large amount of money. I learned that if you take a risk, positive outcomes can happen. In addition, I grasped that you have to be cautious when investing. That is why we researched before deciding on what to do. I also learned what stocks were. This information will further help me in life because no matter what your profession is, you will need to know how to deal with investing. It is a skill that will come of use for your entire life.
In conclusion, investing is a task that requires knowledge, patience, and audacity. Kids who learn about this at a young age will be better prepared for their financial adventures. Now that you have a better understanding of investing, make a plan for what your next move will be for your financial exploration.
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Miya Mathur, First Place Winner, SIFMA Foundation’s National Elementary-Level InvestWrite® Competition