Caledonia Argus

Twelve grand and counting- Investment class paying off for students

Posted: 1/27/04

By David Heiller
Argus News Editor

There are some rich kids at Caledonia High School, at least on paper.

Take Phil Guillien, Chris Jandt, Mike Schiltz, and Kyle Welscher for example.

They took $100,000 on November 25, and by January 15 had turned it into $112,906.73. So in less than two months, they made $12,906.73.

OK, so the money wasnít real. It was part of a competition in their law/finance class taught by Jon Lilliquist.

They did earn a $50 saving bond each from Merchants Bank in Caledonia by being the top team in an investment competition in the class.

And perhaps even more importantly, they learned some good investment lessons on mutual fund research, selection, and tracking. The students in the five other teams all made money too.

Their assignment was in invest $100,000 in at least three mutual funds. One fund must be a mutual fund that invests in large and mid-cap stocks, one must invest in small cap stocks, and one must invest in sector or international stocks.

If you are already confused, student Emily Denstad recommends that you read a book called The Wealthy Barber. It is required reading in the class and explains things like different kinds of stocks and how much to invest.

The students shared some other advice. ìPay yourself first,î Meghan Burg said. Take money from your paycheck, select an investment, and invest. ìBecause youíre more likely to spend that money and say, ëI canít afford it,íî Meghan explained.

Ten percent is a good amount to invest, she said. ìYou think it would affect you more than it actually does,î she said.

And does she do that herself? ìIíve thought about it,î she answered with a smile.

Teacher Jon Lilliquist said the priority is to invest in a 401K plan, and do it at a young age. ìThe sooner you invest, the more that you will make in the long run,î he said.

Phil Guillien spelled it out more specifically: All you have to do is invest $2,000 a year in an index fund for 10 or 15 years, and by age 65, you will have made more than $500,000.

Take time to find a good no-load fund, Guillien added, because they are much cheaper. Find a large index fund in the top 30, or a small cap index fund thatís progressive.

How do you find a good fund? Brandon Frank likes to look at how long the manager has been managing the fund. If a fund has new manager, it may not do as well. But if a fund is doing well and it has a long-term manager, itís likely a good place to invest, Frank said.

Julia Crawford said the Internet has many good resources, such as CBS.Marketwatch.com. You can see returns from 10, five, and three years. ìItís a great way to see all at once how good the mutual fund would be,î she said.

Teaches responsibility

Lilliquist said one main goal of the class is to teach financial responsibility as a lifetime skill.

ìThe students learn that financial success is less dependent on how much you earn than it is on how much you save and invest,î Lilliquist said. ìLive within your means.î

The process takes a lot of discipline, Lilliquist said, and the earlier people learn it, the better.

ìIn their lifetimes, todayís young people will have access to a staggering amount of money,î Lilliquist said. ìMismanagement of this money will have serious consequences.î

He mentioned the likelihood of less money from Social Security and the trend of companies to have employees fund their own retirement.

Here are a few tips that Lilliquist tries to teach his students:

ï Use a payroll deduction so you can save/invest on autopilot each month.

ï Diversify your investments between equity and fixed investments.

ï Use the Internet to research mutual funds.

ï Use an index fund that duplicates the S&P 500 or the Wilshire 5000 as your investment base.

The students take the elective class seriously, Lilliquist said. ìThe students never ask, ìWhy to do need to know this?íî he said.

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