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Many youngsters enjoy raising funds for nonprofit organizations, but 13-year old Emily Lopez wants to manage those funds.
The eighth-grader from Franklin Middle School in Somerset channeled her inner financial adviser to create an investment plan for the Wounded Warrior Project and become the national first-place winner of SIFMA Foundation’s Fall 2017 InvestWrite competition.
Lopez’s essay on how to help a nonprofit organization manage its assets for maximum short- and long-term sustainability has positioned her at the top of thousands of students competing nationwide. Should she ever wish to manage her own nonprofit organization, Lopez has the financials figured out.
She and her teacher, Deborah Gadek, were honored at a surprise event on March 13, at Franklin Middle School. Representatives of the SIFMA Foundation, Wells Fargo, the school district and special guests were on hand to as Lopez was honored.
The Fall 2017 InvestWrite competition required students to select a nonprofit organization they support and outline a financial plan to sustain the financial future of the organization. Lopez wants to support programs that provide services to wounded veterans such as the Wounded Warrior Project.
“These non-profit organizations cannot survive on donations alone,” she said. “Nonprofits must invest the donations they attract in ways that generate sufficient returns to cover operating expenses and meet goals while beating inflation and preserving capital.
“To this end, costs and fees of any investments need to be kept to a minimum and the investment portfolio should be rebalanced if necessary to keep in line with the organization’s long- and short-term goals.”
InvestWrite is a national essay competition that serves as a culminating activity for students taking part in the SIFMA Foundation’s Stock Market Game. Now in its 15th year, InvestWrite is underwritten by Wells Fargo for the SIFMA Foundation.
“Wells Fargo’s commitment to the SIFMA Foundation’s InvestWrite program seeks to build a pipeline for financial capability that starts in elementary school, continues through middle and high school and prepares our next generation for college and careers relying on critical financial decisions,” said Jon Weiss, Head of Wells Fargo Wealth and Investment Management.
“We believe Wells Fargo can achieve this goal by partnering with the nation’s leader in youth investor education, the SIFMA Foundation, given its reach of 17 million students to date,” Weiss added.
According to Vanessa Cooksey, senior vice president and Head of Community Affairs for Wells Fargo Advisors, the grant from Wells Fargo promises to enhance students’ academic ability across important academic and life skills.
“The National Assessment of Educational Progress reports that millions of adolescents are struggling with low literacy skills and less than half of eighth-grade students are performing proficiently in reading, math and personal finance is a call to action for our country,” Cooksey said. “By combining The Stock Market Game’s impacts on student math and personal financial achievement with InvestWrite’s impact on essential reading and writing skills, Wells Fargo’s commitment addresses the three Rs of education — reading, writing, arithmetic — and financial capability.”
Now celebrating its 40th anniversary, the SIFMA Foundation’s national financial capability programs engage 600,000 students and 15,000 educators annually with impacts in raising students’ math, economics and personal finance test scores and, through InvestWrite, their language arts and writing skills.
The fourth- to 12th-graders nationwide who compete each year are reinforcing what they have learned in The Stock Market Game, an online simulation of the global capital markets that reinforces STEM learning, 21st-century skills, economics, investing and personal finance. Through InvestWrite, students are building on what they have learned through their participation in The Stock Market Game, which has reached more than 17 million students since its inception in 1977.
InvestWrite enables students to develop the personal financial savvy needed to make practical financial decisions with confidence and gain a deeper understanding of economic opportunities, consequences and benefits. Students consider real-world events and news, conduct research online, and develop investment recommendations. They work in groups during The Stock Market Game program and then write their InvestWrite essays individually to reflect their critical thinking, analysis and creative talents.
“SIFMA Foundation’s Stock Market Game and InvestWrite are transformative programs that prepare students for college, career and life while teaching them about the capital markets and investing,” said Melanie Mortimer, president of the SIFMA Foundation.
“Our students do measurably better on math, economics and personal finance tests. They also learn to work in teams, manage change, understand the impact of global economic activity, and become smart consumers ready for financial independence.”
Since InvestWrite was introduced in 2004, more than 215,000 students have submitted essays. Lopez is among the 20,000 participants each year in InvestWrite, which bridges classroom learning in mathematics, social studies, and language arts with the practical research and knowledge required for long-term personal financial planning.
Winning InvestWrite essays are chosen through rigorous judging by thousands of teachers and industry professionals who evaluate students’ understanding of long-term investing, diversification, the global capital markets and factors that drive investments as well as their expression of investment ideas in essay form.
Winners receive awards and prizes, including laptops, classroom pizza parties, trophies, plaques and banners, and certificates. The first-place national winners in middle school and high school are awarded a three-day all-expense-paid trip to New York City with their teacher and a parent.
Emily Lopez’s essay, ‘Investing In Our Freedom’
Today is a very special day for me. I have volunteered to manage the investment portfolio of an organization similar to the Wounded Warrior Project® (WWP) that services soldiers in the military returning home. If you’re not familiar with the Wounded Warrior Project®, it is a non-profit organization that was founded in 2003 by Marine combat veteran John Melia to provide free programs and services to address the needs of wounded warriors and their families and fill gaps in government care. These types of organizations are important to me because I have a close family member with 23 years of military service who has been to Iraq many times. Having services such as these available to him was necessary to his physical and mental well-being as well as the well-being of hundreds if not thousands of other veterans returning home.
The demand for programs and services like WWP has grown from serving a handful of injured veterans to now serving tens of thousands of veterans. Veterans organizations like WWP continue to receive hundreds of new registrations each year. However, these non-profit organizations cannot survive on donations alone — they must generate income. Therefore, nonprofits must invest the donations they attract in ways that generate sufficient returns to cover operating expenses and meet goals, while beating inflation and preserving capital. To this end, costs and fees of any investments need to be kept to a minimum and the investment portfolio should be rebalanced if necessary to keep in line with the organization’s long and short-term goals.
To achieve the goals of any non-profit servicing veterans and their families, it is important that the organization’s investment portfolio be diversified to protect and grow the value of the initial invested assets and allow for access to these assets for cash flow needs. This goal is achieved by keeping some cash on hand and by investing in different types of asset classes that would each react differently to the same adverse event. This will reduce the sensitivity of the organization’s assets to market swings since bond and equity markets move in opposite directions. With the organization’s goals in mind, I will allocate 20 (percent) of the organization’s assets to an interest-bearing savings account, 20 (percent) of the organization’s assets in short-term liquid investments and 60 (percent) in diversified long-term investments consisting of bonds, stocks and mutual funds.
Thirty percent of my non-profit’s assets will be invested in large cap stocks like Apple (APPL), Walmart (WMT) and Microsoft Corporation (MSFT). Large cap stocks are generally low risk because they are able to weather market turbulence easier due to their size, have long term growth opportunities and generate revenue from more than one source — such as Microsoft’s cloud computing division Azure. In addition, all of these stocks have consistently issued dividends to their shareholders which would provide much-needed cash to the organization.
Next, I will invest 10 (percent) in index based mutual funds such as the S&P 600 Small-Cap Index. This fund had a 9.27 (percent) return over the past year and analysts predict at least 18 of the stocks in this fund will show 50 (percent) gains over the next year. Despite having lower returns than the S&P large cap fund, the tax reform bills currently in the Senate lower income tax rates for US corporations. This would benefit most U.S. companies, especially small-cap companies since their revenues tend to be concentrated domestically.
Additionally, I will invest 20 (percent) in a Money Market Fund. These types of funds invest in short-term fixed income securities such as government bonds, treasury bills, bankers’ acceptances, commercial paper and certificates of deposit. These funds are low risk but highly liquid. They also have no load fees for entering or exiting the fund. Although, they are generally a safer investment, they have a lower potential return than other types of mutual funds. Since access to cash is important to my organization’s daily operation, investing in this fund will allow the organization to continue to provide services to veterans around the world.
Finally, I will invest the remaining 20 (percent) in a bond fund such as the Vanguard Total Bond Market Index Fund, an intermediate bond fund (maturity of three to six years) with lower than average fees which holds more than 5,000 domestic investment-grade bonds. This bond fund will give my organization the opportunity to earn income and will help balance the risk associated with the small cap stock fund. It will also spread out my non-profit’s exposure to risk by holding hundreds of bonds in a single fund.
In conclusion, organizations such as WWP and other non-profits assisting veterans are necessary to help our soldiers come home and live the lives they deserve. Utilizing the investment portfolio of long and short-term investments as well as immediate access to cash, my non-profit organization will be able to provide necessary services to veterans as well as guarantee the sustainability of the organization and its mission.
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