Cooperative Investing

Back in elementary school, teachers taught us how to be fair, share, and cooperate with other children. The article How to Get the Rich to Share the Marbles of the New York Times discusses how when two children cooperate together and are fair in doing so, the marbles that they would collect are more likely to be shared equally among the two children. This is a human response to earning the output from the amount of input work. In the American economy, President Obama wants to instill more taxes on the rich so the poor can save more money because all of the rich people do not need so much money as they will be able to live with a great amount of satisfaction while the poor need every penny that they can get their hands on. However, nobody wants to get taxed more because they worked harder to get to where they are and as a result get punished for being more successful.

My sister and I received an inheritance from my grandparents when they both passed away. Being the economics major and having knowledge of financing, instead of investing the money separately, my sister and I are planning to invest the money together, and put in all of the money in one pot. Having more money means that we will have leverage. Let's say that we wanted to invest in Tesla which closed Friday at 235.24. Assume that I saw that there was a potential growth of the 64.76 in two years down the road and close at the end of the year at $300. If I invested in Tesla by myself and my sister was not confident in making this investment by herself because she didn't know about the potential of Tesla, I would not have double the amount of money to invest into this stock. When I put in $12,500 into Tesla by myself because you never want to invest more than 5% of your money into one investment, then I would make a profit of approximately $3550. On the other hand, when I explained to my sister why the stock will be a good investment based on my analysis and she agrees to invest in Tesla, we would end up making $7100. 

This profit would give us more leverage to invest in other stocks in the same manner. Both of us would only benefit from this strategy since there are two minds being put to use for investing a half-million dollars, as well as having leverage to put more money in a stock, especially the expensive ones. As long as we both were equally analyzing stocks and putting an equal amount of money into the stock, then there should be no discussion on why we would not split the profits or continue to do the same procedure for the rest of our lives. This example seems to correlate with the article How to Get the Rich to Share the Marbles of the New York Times.

Real World Preparation

Managing future income risk has been a part of my preparation for my future since high school. During high school, I took as many Advanced Placement courses so I can have more flexibility when I came to college. To be exact, I took seven Advanced Placement courses which gave me roughly 30 hours of college credit. Furthermore, I received a 35 on the English part of the ACT exam, which also got me credit for the introductory writing course here at the University of Illinois. When applying to schools, I wanted to go to a school which provided the greatest return on investment and at the same time a top nationally ranked university. There is data that is provided on the internet and in books regarding those two categories of the best ROI and best engineering school, and I went on to apply to the University of Illinois, University of Wisconsin, University of Texas, University of Michigan, and Georgia Tech. I was accepted to all of these schools, but chose to go to the University of Illinois because it is the cheapest out of the schools which fell into the two categories that I mentioned.

Once I arrived here, I chose my engineering major as electrical because it would provide me with the best chance to get a job and the greatest income in the short run. However, as time went on, I realized that I need to enjoy my coursework and the career that lies ahead of me. So I went to the college of business to switch my major to finance, but they said it was too late to switch my major, so I chose economics as my major with minors in mathematics and statistics. The reason I chose economics is because the potential salary is highly competitive in relation to other majors on campus; furthermore, I am interested in economics and applying it into the world of finance after graduating. Clearly I chose economics because it will lessen the risk of future income.

I will continue my education after I complete my economics degree by starting on my Master's in Statistics next semester. Since I want to start working immediately after I graduate, I will finish my M.S. Statistics part time online. This will further help lower the future income risk that every individual endures. Another continuing education route that I have been analyzing is the Certified Financial Analyst, otherwise known as the CFA. I would want to complete the CFA later on in my career when I work as a portfolio manager. Typically, a portfolio manager needs experience in the financial industry, so I will be patient in beginning my studies for this certification.

Aside from my education, I have put my economics and quantitative background to work during the past two summers. I interned with my father's company as a data analyst. I used a lot of statistics, particularly creating regression models based on consumer data. I enjoyed working there and it made me realize that I will want to use number everyday throughout my career. Last summer, I interned with Northwestern Mutual because I wanted to understand finances more. I also enjoyed this internship, and they both help me lower my future income risk because having internships help obtain an entry level job. Finally, my grandmother gave my sister and I an inheritance. My sister used some of it for her year long internship program in Boston and just obtained a full-time job but hasn't started working yet. She paid for the internship program and housing at Beth Israel Medical Hospital which is associated with Harvard Medical School, which tells me that her future income risk has been lowered because she can write that she is associated with Harvard. I have put my inheritance towards middle term and long term investments,  like mutual funds, stocks, bonds, my children's education, life insurance, and a retirement fund. It is always good to start early!

Illini Bucks

Using Illini Bucks as a method of transfer pricing would drastically change the economics at the University of Illinois. Timing is everything, and using Illini Bucks to save time for an individual’s priorities would benefit every student. This would benefit every student as different people set priorities differently. Currently, I am a senior with 12 hours of class. Consequently, I would use weigh the use of my Illini Bucks on recreational activities more than on educational activities. However, I could imagine that a majority of students would use their Illini Bucks on educational activities more than on recreational activities, as the purpose of college is to obtain a diploma or diplomas.

The pricing of the Illini Bucks would have to be priced just like a store prices their inventory, or like a restaurant prices the items on their menu. Every item would have to be analyzed by data analysts. The data analysts would look at trends regarding how many students are interested in a particular use of Illini Bucks. The Illini Bucks would be able to fluctuate just like interest and inflation rates fluctuate in the economy based on the current state of the economy.

With an easier schedule, I do not have to focus my time on education, especially when this is my final year in college and I will never have the opportunity to work less than the standard 40 hours per week. When I graduate, I hope to get into an investing career, and investors work long, hard hours. In conclusion, I would allocate 60% of my Illini Bucks towards recreational activities and 40% towards educational activities.

Furthermore, the 40% of the educational activities would be geared towards obtaining a full-time job. In using my Illini Bucks towards getting a full-time job, I would use them to cut the line at career fairs. Career fairs are the best way to obtain a job with iLink being next in line. Typically, a career fair will be run between the hours of 12-5. When at the career fair, the bigger and well-known companies will have long lines that may take a student 30 minutes to finally talk to the company; hence, the student will lose the opportunity to talk to all of the companies at the career fair. By using Illini Bucks, I would be able to talk to all of the corporations that I need to talk to, which is an insurmountable investment. I would also use the Illini Bucks to get my resume looked at first on iLink. By doing this, I would have the greatest opportunity to have a few options to choose from when graduating.

I am not concerned with using my Illini Bucks towards my schooling. I do not need to get priority for signing up for classes since I am a senior and am taking two different economics seminar classes that were not full, and I have hundreds of options in choosing my free electives. Apart from signing up for classes, there is no need to use my Illini Bucks on getting a good studying spot since I study in my room.

Finally, the other 60% of my Illini Bucks would be allocated towards recreational activities. This would include cutting the lines at the bar called Red Lion. Red Lion has very long lines, especially on Tuesday because of senior night, Thursday, and the weekend, since there are no classes on the weekend. Other students may use their Illini Bucks at different bars, but I prefer to go to Red Lion.  Also, when at the bar, I would use my Illini Bucks to be the first person to obtain a drink, since many times, it takes a few minutes to order drink. Aside from the bar scene, I would use my Illini Bucks at restaurants with long lines or restaurants that take awhile to serve. Everyone knows how long the line at Chipotle gets, so being able to get to the front of the line at Chipotle would benefit my craving for Chipotle.