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5 career opportunities if your child is interested in stocks

5 career opportunities if your child is interested in stocks

The future is bright

Is your child interested in investing in stocks, cryptocurrencies, art, or real estate? 
 
We got you covered with career opportunities they should know about. 
 
The four categories of stocks, crypto, art, and real estate are expansive, so today, we’ll focus on stock investment careers. 
 
You always have the choice of entrepreneurship, building a career as an employee, doing both at the same time, or switching from one to the other. 
 
By the end of this 3-5 minute read, you’ll be able to share with your teen some career paths they might like and how they can pursue entrepreneurship as well as an investor. 

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1. Hedge Fund Manager

Overview: To help understand what a hedge fund manager does, we’ll briefly share what a hedge fund is. If you already know, skip to the next section.
 
Hedging means to reduce risk. A hedge fund uses a variety of investment and asset management techniques to maximize the potential return for clients while keeping a comfortable level of risk. 
 
“Hedge funds are pooled funds, meaning that they consist of investments from many different individual investors for the purpose of a larger investment portfolio with more diversifying potential.” – Schweser
 
Hedge funds require a large initial investment, limiting investors to high-net-worth individuals and institutions. Normally basic requirements are that investors have a net worth of over $1 million and an income of $200,000 or more. 
 
A hedge fund manager’s job is to develop investment strategies and manage trading activities based on their clients financial goals. They make decisions about when to buy, sell, or hold assets in order to stay as cost-effective and profitable as possible. 
 
Skills required: Hedge fund managers need to be skilled in finance, accounting, consulting, and researching. They normally have a team of financial analysts to support them with information they use to make predictions about future trends. 
 
This is not an entry-level position, and usually requires a few years of experience first. 
 
Salary potential: The current average seems to fluctuate around $126,000/year. However, hedge fund manager compensation usually operate under what’s called a Two and Twenty model. 2% of the total market investment they are responsible for, and 20% of profits made by the fund after a certain threshold. 
 
The top 25 hedge fund managers in 2020 earned a total of $32 Billion together. So it is safe to say, the potential is high. 

2. Private Equity Associate

Overview: Same for private equity associates, we’ll brief you over what a private equity firm does to help us explain their job responsibilities better.
 
Private equity firms basically invest in companies that are not publicly traded on the stock market. Two subfields of private equity include venture capital (VC) and leveraged buyouts (LBOs). 
 
Private equity firms can buy companies outright, take 6 months or so to change the internal structure and business model and then resell. 
 
They can invest into startup companies they believe in. Sometimes they acquire control of public companies and delist them to take them private. 
 
Most private equity firms are open to high networth individuals to join because the firms with the largest funds usually dominate the space. 
 
A private equity associate helps find new potential investors, find new investment opportunities for the firm, assist with acquired investments, and everything in between. 
 
On a more detailed level, they close deals with investors, assist partners to make good investment decisions with analytics, screen confidential information memorandum documents (CIM), etc…
 
Skills required: A few skills to keep in mind to develop on the path to becoming a private equity associate are negotiation skills (to help close deals, you’ll have to negotiate with private investors), financial modeling (making predictions of an investment’s potential profit by looking at their quarterly numbers), and networking (to find potential deals, find potential investors, or even initially find the job).
 
Salary potential: On average, a private equity associate can expect to make $103,543/year plus bonuses from the deals they helped close.

3. Credit Analyst/Rate Analyst

Overview: Credit analysts assess the creditworthiness of an individual or company. 
 
Based on the financial and credit history of the subject in the scenario, they assess to see how likely they are going to be able to repay their financial obligations. 
 
“Credit analysts are typically employed by commercial and investment banks, credit card issuing institutions, credit rating agencies, and investment companies.” – Investopedia
 
A credit analyst’s day to day will include gathering and analyzing financial information to help make decisions on lending. They will look at factors such as payment history, liabilities, assets, and earnings. 
 
For example, if they work at a commercial bank, they may look at an IT company’s financial statements before approving a loan for more hardware.
 
Skills required: Credit analysts are less customer facing than hedge fund managers and private equity associates, so the skills they need to be successful would lean more towards analyzing financial data, and accounting (mathematics, quantitative analysis).
 
Salary potential: On average across the US, a credit analyst makes $86,170/year. This can fluctuate depending on location and experience. For instance, in NYC, salaries can be up to $125,000/year. 

4. Trader

Overview: A trader is someone who engages in buying and selling financial assets for themselves or for an organization. 
 
Financial asset examples include cash in hand, stocks, bonds, and cryptocurrencies. 
 
A financial asset is a liquid asset, where the value of that asset reflects the supply and demand in the marketplace that it’s traded in. 
 
A liquid asset is an asset that can quickly be converted into cash. 
 
The main difference between a trader and an investor is how long the individuals tend to hold the assets they purchased. 
 
Investors usually have a longer plan, and traders tend to capitalize on short term trends. 
 
A trader that works for a company are given a limit to how much they can buy, and have guidelines that include a risk tolerance for when they should sell.
 
These traders are paid a salary and bonuses depending on their performance. 
 
A trader who trades for themself, will use their own money and keep all the profits, however, they’re likely to have less funds to use in the beginning.
 
Skills required: In addition to a general knowledge of finance and business, traders should be skilled with mathematics or engineering. 
 
They also need to develop research and analytical skills in order to assess economic factors and daily patterns that would impact the market.
 
Salary potential: According to Glassdoor, a traders average salary $102,000/year. According to Indeed, a trader’s average salary is $82,700/year + average commission of $30,160/year. 
 
In regards to traders (according to Ziprecruiter) “annual salaries as high as $261,500 and as low as $19,500, the majority of Self Employed Trader salaries currently range between $40,000 (25th percentile) to $90,000 (75th percentile) with top earners (90th percentile) making $149,000 annually across the United States.” 
 

5. Independent Investor/Trader

Overview: The options are limitless if your teen wants to create income streams for themself as an investor or they want to build a business related to investing. 
 
In the beginning they may need to find a way to get funds to invest (whether that would be from a salary, contract work, or getting funded). 
 
If they want to start a business related to investing, they’ll start with identifying problems they think they can help using investment and then build a business model around that. 
 
For example, if they are passionate about healthy & fitness, and they found research that states X% of people who are obese are also depressed, they could start a gym where a percentage of memberships will go into a purchase shares of their gym (giving the members ownership of the gym). 
 
So in this case, in addition to losing weight & gaining confidence, the members can also financially see the fruits of their month to month commitment to getting fit.
 
Skills required: Independent investors and entrepreneurs both need a lot of the soft skill perseverance.
 
In regards to tangible skills, they should work to develop communication skills, strategic thinking skills, problem solving, and research. 
 
Specifically for the entrepreneur, they’ll also need to develop skills in sales and marketing to acquire a steady flow of customers. 
 
Salary potential: Uncapped. The more you perform as an independent investor or entrepreneur, the more you can make. The compensation potential is connected to your performance. 

Takeaways

✅ Building a career in the finance/investing space can be lucrative
 
✅ Skills that seem to be important for success in this industry include: analyzing, researching, mathematics, and decision making
 
✅ There are many avenues to invest (stocks, cryptocurrencies, real estate, and art)
 
We will be sharing quick & useful readings about the other areas of investments in the near future. If you have a specific topic in mind you’d like to see more of in the future, please let us know by replying directly to this email.
 
If your teen is not interested in investing, but in another industry, what would you like to see career opportunities from? 😊

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