FOOL ON THE HILL
Investing Lessons From College

In addition to a few critical life survival skills, everything you really need to know about personal finance is disclosed to you in college. Dayana Yochim reviews the four essential lessons.

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By Dayana Yochim (TMF School)
May 17, 2002

It's been a few years (OK, maybe a decade or so) since I strolled the hilly campus of the University of Kansas on the path to responsible adulthood and a decent internship. But the lessons I learned during those four-plus years continue to serve me well. Things like how to pry out contact lenses after pulling an all-nighter still come in handy. (Look, my mom may be reading, so let's keep it tame.)

In addition to mastering the Hegelian dialectic and learning how to stuff a cow into the dean's office, in actuality, everything you really need to learn about personal finance is disclosed to you in college. Let's review those lessons:

Lesson No. 1: Trying to make up for lost time by cramming doesn't work. How many times were you up at 4:00 a.m. the night before an exam, six cups of coffee in you, looking at material for the first time? There's no substitute for keeping up with the reading from the beginning if you really want to learn it. So, too, with investing for your retirement: You can't cram all your savings in at the last moment. (Just look at the example of Patrice and Bianca in our Investing Basics area.) Start early and develop good saving habits. And thank your lucky stars that your 401(k) paperwork is multiple choice.

Lesson No. 2: You get just as much credit for passing the easiest courses, and you get to sleep later. Whether they're called "TV in Our Society: The History of Soap Operas" or "Modern Clothing Theory," there were some awfully easy courses that don't require a whole lot of effort to keep up with. So, too, in investing. Some of the best investments are what we call "Obviously Great Investments." Investments like Coca-Cola (NYSE: KO), General Electric (NYSE: GE), or Microsoft (Nasdaq: MSFT). Heck, go ahead and use the investor's version of CliffsNotes and go with an index mutual fund. You don't have to find companies that you'll never understand in order to invest well.

Lesson No. 3: Marry the one with the good personality, not the really, really hot one. How much time did you spend daydreaming about the best-looking guy or gal in your class? If you're even remotely normal, the answer is "a lot." (I can still picture Jeff from English Comp. 102.) But it's usually not the hotties that will bring you a lifetime of happiness. So, too, with stocks: The hot highflier is not too likely to reward your long-term faithfulness.

Lesson No. 4: A little self-discipline goes a long way. Did you experience the "freshman 15," that extra 15 pounds of weight that mysteriously attached itself to you while you were too busy having fun to notice? In life, credit card debt somehow, mysteriously, manages to do the same thing if you're not looking (if tuition hasn't already drained your bank account). For either of these problems, the lesson is that it's easier to acquire the weight than it is to burn it off. (If you don't believe me, just check in with the Fools Fighting Fat.)

As I strolled down Mount Oread to the strains of "Pomp and Circumstance" on my graduation day, little did I know that I was already equipped to handle the financial curveballs of adulthood. Even today as I face snack food, dating, and investing decisions, I hark back to the good ol' days at KU for guidance.

Since we're all about full disclosure here at The Fool, Dayana Yochim was three credits shy of earning her degree at graduation. That summer she took up a soldering iron and hand saw, and topped off her college career with a course in metalsmithing.