As most of you know, I’m a graduate student in here in Florida since 2000.  My financial background is about as average as you can get.  My parents are considered middle class, and as a result, financial aid isn’t as readily available.  In my opinion, students from financial backgrounds similar to mine are the ones that are hit the hardest.  We’re forced to find creative ways to fund our schooling while absorbing large amounts of debt.  Folks higher in the financial food chain normally can afford the skyrocketing prices of college (although it’s becoming much harder for them as well).  Those lower on the financial chain have a variety of programs available to them, some being addition federal help, grants, scholarships based on financial need, etc.

Before you say anything, this isn’t a rant against the education system and the government.  I believe the government should do more for the middle class, but historically that’s not been the case.  In any event, and even more so for students in my position, you should be looking forward to taking risks, financially, while in school.  But how can some of us take risks when we’re barely able to survive?

That’s the key.  I’m sure some of you are tired of living off the typical college staples (ramen, pizza, cheap beer).  So what can you do about it?   I’m currently taking loans from the federal government, some of which are subsidized interest wise, while others aren’t.  What does this mean?  It means that while I’m at school, about half of all loans I take out from the federal government are effectively interest free.  Subsidized loans are just that – the government pays the interest while you’re in school.  So take advantage.  Am I advocating going into debt while in school?  Yes!  What reason do you have, while in school, to not take advantage of interest free money and explore any ideas you may have?  I know, most students like to go out and party and all that jazz.  But for those that are focused on the future right now, why not take $2,000 or $5,000 or even $10,000 and learn the markets?  Or take ownership in a business?  Or even start your own?

I know what you’re thinking.  It’s a loan.  You will have to pay it back once you’re out of the system.  But honestly, when you’re pushing $50k, $75k, or in my case close to $100k, what’s another $5-10k?  Who’s to say you can’t turn that $5-10k into $10-20k while you’re finishing up your degree?  Sure, you could lose it all, but what’s another $5-10k when most adults are taking anywhere from 10 to 30 years paying off their student loans. 

Or if you prefer, you could always take that $5-10k and stick it in a CD or Bond.  Your ROI might be enough to help cover rising costs due to current inflation rates.  Or perhaps you could take your friends out for a round of drinks.

About three months ago, I was flipping through the DirecTV guide when I noticed a show on CNBC titled Mad Money. It is a catchy way of stopping a channel surfer. First impressions of the show? A middle-aged bald lunatic yelling and screaming on the set, randomly pushing buttons which make sounds and splash graphics on the screen, tossing books and stress relief toys, and outright odd gestures. I thought to myself, “Self… how can someone like that have their own TV show, let alone on the largest business channel in the country?” So what do people in my generation do nowadays when they see something they do not understand? You wiki it of course.

Mad Money Wikipedia

Mad Money is an American financial investing television program hosted by Jim Cramer that began airing on CNBC on March 14, 2005. Mad Money was a departure from the programming then offered by CNBC, as it offers investment strategy and stock-picking advice in an entertainment format.

Investing as entertainment? Nah. I used to put CNBC on at night in order to help fall asleep after a rough day. As a college student, anything that involves being fun and entertaining and making money, since most of us have very little, is always a positive. Of course, who the heck is Jim Cramer?

James Cramer Wikipedia

After reading his bio, I’m thinking to myself, again, “So you’re telling me that a law student turned journalist who lived out of his car became one of the most successful investors in the past 30 years?”

On April 25, 2007, I became a Mad Money viewer.

Now, I knew very little about investing. I received a degree in Nuclear Engineering along with a Masters in Nuclear Engineering Sciences, so I have some concept of numbers, supply and demand, and overall basic economic knowledge. All I needed now was some kind of guide or instruction manual on how the stock market works. Well if Cramer managed to make it, he must have done something right, right? I went ahead and purchased his newly released book that same day, Cramer’s Mad Money: Watch TV, Get Rich.

Two days… that’s how long it took to finish his book. The concepts seemed so simple and the explanations used little to no market jargon. I had to jump into the market right away. It actually took longer to find an online broker (someone who acts as a vehicle for trading stocks and other investments) than to read Mad Money. I decided last minute to go with a newly founded company called Zecco Trading (a review of Zecco Trading can be found in my brokerage review section). I had recently sold my four-year-old laptop for $500. That would be my starting balance in my investment account.

(Note: Before starting an investment account, make sure you’re debt free. There’s nothing like making great gains in the stock market but having them offset by high credit card interest rates or loans.)

Fast forward to today. I’ve slowly saved up what I call “tuition money” for investing in the stock market. I’m a college student. We don’t have great streams of income. Simulation, or paper, stock trading involves no risk since no money is involved. I don’t feel that a simulation is normally the best way to learn some things and investing is one of them. Folks normally take larger risks with simulation trading because it’s fairly easy to start over. Once real capital’s involved, the game changes quite a bit. At the time of this post, I’m actually down $3 from my initial deposits. But the knowledge I’ve gained from getting my feet wet is invaluable.

Next topic in series: Investing in the Stock Market – How I’ve Learned to Buy, Hold, and Sell (Part 2)