Friday, November 27th, 2015

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Young Investor Plans for the Long-term

For Jay Arena, it all started with a lesson in saving. This recent graduate of Quinnipiac University in Hamden, Conn., saw the light early on: the benefits of investing early in life and taking advantage of the "magic" of compound interest. In fact, it was in his junior year of high school that he realized that saving his extra change would bring many more benefits in the long-run than spending it.

To understand what it took to solidify the benefits of investing in Arena’s mind, it takes a lesson in respect – respect for money that is. As strange as that might sound, respecting the future value of money saved and the hard work that went into earning money is the first step to becoming a disciplined, successful saver.

If you truly want to set yourself apart from the crowd, especially in regards to financial independence, all it takes is a strategic lifestyle change and some sacrifices when it comes to finances. What that really means is making a conscious effort, with every purchase or decision affecting your finances, to understand the value of what is given up for what you gain.

Do you really need that Grandé Latte from Starbucks every morning? Maybe it is worth more to you in the long run to opt out and make your own coffee before heading off to start your day. This is the type of realization that Arena came to at an early age and has been able to incorporate into his life.

Perhaps even more, though, it was his father that instilled a sense of financial discipline in him. Beginning with saving and then investing, his father acted as Arena’s role model, teaching him how to research stocks and talk with professionals about investments.

Of course, Arena is smart enough to realize that he doesn’t know everything about investing at this point. He turns to several resources for help in analyzing prospective investments including Standard & Poors and Yahoo! Finance.  To learn more about investing, he recommends "The Millionaire Mind" for a great read on the insight and discipline of the average millionaire. Investopedia’s website also offered him a variety of industry articles, investing lingo definitions, and other helpful tutorials.

Arena believes in a balanced portfolio that is diversified with cash, conservative mutual funds, aggressive mutual funds, and actively-traded equities such as stocks. In choosing his stocks, he takes a big picture approach, not employing any one strategy exclusively. Seeing very successful investors the likes of Warren Buffett, who don’t just invest in value stocks or growth stocks, Arena analyzes investments on a circumstantial basis.

Trusting the instinct of the market, he watches trends in the 30-week moving averages (the average price of investments over the last 30 weeks) and the volume of trades of the respective investment. In his opinion, when there is positive news that seems sustainable, it may also be a good buying opportunity. After deciding to purchase an investment which has experienced a price escalation, Arena will even consider buying more to realize even higher upside potential.

On occasion, buying more of an investment has ended in a loss of more money than if Arena would have just held what he originally bought. This has encouraged him to diversify, so as not to have too big of a chunk of his portfolio in any one investment. Another lesson has been in avoiding being greedy, and selling investments that have reached their peak instead of holding and hoping for even higher returns.

As you can tell from his ambitious past, Arena will be someone to watch in the future. He is currently working on becoming a financial advisor so he can not only build his own wealth, but help others who might not have his knowledge or passion for money management. From all of this hard work and some sacrifice, such as living at home to help save money, Arena hopes to become financially independent by the age of 35.

No matter what your circumstance, you can become financially independent, too. All it takes is some discipline and creativity. In the words of Arena, "we are all constantly faced with financial difficulty, but only the disciplined and creative can overcome it. "

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