Dane McNulty and Ryan Rivera

Guest columnist Dane McNulty is a senior finance and accounting student, who also serves as the president of the Baldwin Wallace University Investment Club. McNulty has accepted a full-time position as an investment banking analyst following his May graduation and plans to utilize the investing knowledge he’s gained at BW.

Guest columnist Ryan Rivera is a Baldwin Wallace University Business Analytics MBA student with a deep passion for finance, honing his skills through internships and extracurricular activities while in school. Graduating in May, Rivera is pursuing a career in investment banking, seeking an opportunity to leverage his financial modeling and analytical capabilities to contribute to successful deal execution.

As finance majors, we’ve been steeped in the power of investing throughout our time at Baldwin Wallace University, including hands-on experience managing real capital.

We are the latest students in BW’s Investment Club to guide the growth of a portfolio from a modest start of $150,000 in 2006 to more than $1.2 million today. To obtain that growth, we employ careful research using the same Bloomberg Terminal databases that Wall Street traders rely on daily.

Our Investment Club meetings — where students make all final buy, sell and hold decisions — draw students from all across campus.

In fact, our generation has been encouraged to invest in our future from an early age. From our parents harping on the importance of saving for retirement to mobile investing apps making it easier than ever to buy stocks, bonds and funds, the message to start building a nest egg is everywhere.

While Social Security and pensions may be shaky by the time we hit retirement age, building a diversified portfolio should help us ensure financial security.

The rise of social media has amplified our peers’ zeal for investing. On platforms like Reddit, TikTok and X, investing is sometimes idolized as the path to wealth and financial freedom. Posts go viral showing massive returns from risky bets on “meme stocks” or cryptocurrencies.

Some young investors feel pressure to jump on the next hot opportunity.

We know the feeling of capitalizing on a “unicorn” stock. BW’s Investment Club chose to invest early in artificial intelligence chipmaker Nvidia, which generated a return of more than 15,000 percent as AI heated up through 2023.

Now, through a detailed covered call strategy enacted over time, we have been paid to own the stock due to our early investment.

At the same time, we understand those outsized returns are the exception, not the norm.

To be sure, there are pros and cons to investing at a young age. On one hand, the power of compounding means we have decades for even modest investments to grow into substantial nest eggs.

On the other, inexperience and risk appetite can lead to costly mistakes.

Of course, investing doesn’t have to be our parents’ version of buying stodgy mutual funds and holding them for 40 years. Digital platforms let us trade stocks with just a few taps, and we easily swap investing advice via social media.

But it’s important for young investors to have a balanced, long-term approach. Here are some tips:

• Until you gain more experience, it’s safer to invest in diversified funds that track the overall market.

• To avoid selling investments when the market is down, maintain an emergency fund with three to six months’ expenses in cash or cash equivalents like a high-yield savings account or money market.

• As soon as you can, contribute to tax-advantaged accounts like a 401(k) or Roth IRA to maximize long-term growth.

• Have a strategy to systematically increase your stock allocation as you can handle more risk. Then, dial back that risk the closer you get to retirement.

• Don’t blindly follow viral social media advice. Do your own research from trusted sources.

The bottom line is that building a nest egg is never going to get easier than when you’re young. By prioritizing investing now — even just setting aside a few dollars here and there — ­­­­you can harness the power of compounding for your future.

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