By Alice Stretch, Trainee Investment Manager, Emerging Markets, Baillie Gifford, Edinburgh
If you’re reading this blog you’re probably a student, a teacher or someone in the industry (and if you’re somehow here accidentally, you’re very welcome anyway). If you would like to become more involved, hear inspirational speakers and meet people in the finance world (link to conference…)
My name is Alice, I’m in my first year as an investment analyst. If you’d said that job title to me aged 16 I genuinely wouldn’t have had a clue what it meant!
To me, “finance” was people in tall glass buildings, wearing expensive suits, newspapers under their arms shouting TV-scripted phrases about ‘the market’. In all likelihood they would all be men. OK, maybe one woman in a power suit and huge heels, but she’d be the baddy.
Over the past few years I’ve learnt how false that image is (well, most of it). Even though I’m just starting my career I can see that finance generally and investment specifically can be a rewarding and worthwhile career.
What is investment? Being new to the industry probably makes me a little underqualified on this question, but hopefully it means my perspective is closer to those exploring the industry as well as minimal technical jargon.
If an individual, a company or a group has money in savings, like pensions or piggy banks, they want their savings to ‘grow’. Not literally in height or weight but in terms of its value and we help them do that.
If you have a piggy bank and a £5 note, you have a few options:
- You could use the £5 straight away and buy a magazine and some chocolate in a shop, or
- you could put it in the piggy bank for a year and buy the magazine and chocolate in a year’s time.
However, in a year the prices may have gone up and you would probably prefer to have the magazine and chocolate right now, rather than wait. Sometimes by waiting you can increase the value of the money, and one way to do that is by investing.
The £5 note wouldn’t grow by magic when you put it in a piggy bank, so you might try and put it in a bank account. To double your £5 into £10 you would need a 200% interest rate which is a lot higher than the UK’s 0.75% (the interest rate is the amount the bank pays you to have ‘access’ to your money).
So where else can you put your money to make it grow? One place is into a company that is doing exciting things and once they grow they can start paying you back. We would call this an investment opportunity. My job is being in the middle of that – between the people who have trusted their piggy banks with us and the exciting companies. To make sure we find the right places to put the savings, we have to research the companies and that is the main part of my job.
I look at companies, researching them so that a decision can be made on whether they are worth investing in. I do this by looking at five areas before that ‘investment decision’ is made. To try and explain each step, I’ve broken it down into what an investment decision would look like for your own ‘career decision’.
- Industry Background
For a company this is looking around it and seeing if growth is possible, usually starting from if there is enough of a market.
For a career decision this would be looking at your school and its career department, where they see growth, are there enough jobs in the area you want to work, will there be university or apprenticeship places, what is right for where you want to go?
- Competitive Advantage
For a company this is seeing how strong their idea, product or service is and whether they can keep it strong against competitors in the future.
For your career decision, this would be asking what can make you be competitive or different to other people. This could be through:
- Experience: doing internships, attending events like the Future Asset Conference,
- Networks: meeting people, asking questions and learning from them, or
- Planning: writing down your aims and working out your next step.
For a company this would be whether their competitive strategies are correct for growth and can the boss and their team make it happen?
For your career, you are the ‘boss’ and your ‘management’ are people around you, ask who can help you make decisions, reach your goals and motivate you – family, friends and teachers.
For a company this is looking at how are they funded, what they spend it on and whether this all makes sense. We usually find these numbers in an ‘annual report’, which is kind of like a school report as it gives us an indicator of how the company is doing.
In your career decision, this could be looking at scholarships, funding or combining experience with this by having a part-time job. In another way it could be analysing your school report to see where improvements can be made and reaching out to people who can help you with this.
For a company this is to see whether it is valuable or worthwhile with lots of ways of calculating this.
If you were to ‘value’ your career decision, it could be putting all of the other points together and working out what future opportunities are open to you.
Hopefully that outlined how I structure looking at a company as well as getting the ball rolling to hone in on aspects of your career decision as an ‘investment’.
Although certain experiences may not seem the most relevant or may not lead you directly to where you want to go, no experience is wasted, trust me. I worked in a pub when I was fourteen and one of my Friday night duties was de-shelling prawns in the kitchen. Six years later I was on a study abroad programme in Asia and sat at a welcome dinner in Hong Kong. On my table were admissions officers from universities, leading academics from across the world and other study abroad students. To say it was intimidating was an understatement!
The first course was served, and it was shell-on prawns. Out of the entire table I was the only one able to eat it without any fuss. I would never have believed it if you’d told fourteen-year-old me that learning this would help me fit in with prestigious people on the other side of the world one day.
You never know what experience will come in useful. Even if this post didn’t seem relevant maybe something will click one day! The best way to broaden your horizons and learn is to try your best with everything you do.