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Byleth read the letter from the office of the Archbishop for the third time and had about as much success as they did with the first and second. They hummed a forlorn sigh as they turned the folded page over and started on the fourth.
"Good morning, Professor," said Dimitri as he entered the Blue Lions classroom his customary forty-five minutes early for lessons. "You seem troubled. Is everything alright?"
Byleth nodded at the same time that they sighed, which was not terribly convincing, they were sure. "It's nothing," they said. "Just going over some administrative... stuff."
"Is it anything I could help with?" Dimitri asked hopefully.
"Not unless you know what it means to 'allocate funds' in a 401(k)," said Byleth in what was intended to be a joke. "I'll just talk to Seteth about—"
"Oh! I know a small bit about retirement funds," said Dimitri, glittering with excitement. "My father's 401(k) was rolled over into a managed IRA for me as part of my inheritance. I am unable to be made the legal custodian of the account until I reach the age of twenty-five, but I have been working with my uncle to see how everything is done. Perhaps I can help you with a few things."
Byleth stared blankly at Dimitri, because he had just said a whole bunch of words, and also letters, and some numbers, too, and the numbers seemed like the most manageable part of the entire thing.
"Um," said Dimitri, wary of their blank stare, "if that is alright with you, of course. I know that personal finance can be, well, personal."
"Please help me," Byleth said, shoving the letter at this teenager. If this could save them from having to talk to Seteth, by the Goddess, they'd do it.
"So, by putting the 'full' six percent of your monthly stipend into this account, Garreg Mach will supplement by half of that—three percent—such that you will effectively be contributing nine percent of your income to your retirement," Dimitri summarized, gesturing at the chalk equations he had written out on the board while Byleth sat at a student's desk and sat at rapt attention. "This is a convenient number, since studies suggest that you should contribute around ten percent of your earnings to long-term investment accounts to be prepared for retirement."
Byleth nodded, jotting down notes in the margins of the letter. "What should I do with that extra one percent?" they asked. "In order to contribute the full ten percent from the studies."
Dimitri lit up at the question. "Well, you are not limited to only a six percent contribution!" he explained. "You could contribute seven percent. It is just that the employer will only half-match on your first six percent. Many investors seek only to contribute the minimum amount required to maximize the returns from the employer, but you can contribute as much as you like, up to an annual maximum of 19,000 gold. Er, I believe it is around there, this amount rises every few years with the inflation rate..."
Just as Byleth's eyes began to glaze over in contemplation of such a massive sum, students began to trickle into the room. Felix was not usually punctual, despite coming direct from a morning session in the training grounds. Usually he decided that his training was more important than lessons and showed up anywhere between five and fifty minutes late. Today, however, Caspar's rambunctious energy and excitable voice bouncing off the walls behind him. Byleth could guess why he had decided spending any longer in the training halls wasn't worth it. Felix took one look at Dimitri and the chalkboard, and one at the professor, and said, "What are you doing."
"Oh, ah, good morning, Felix," Dimitri said, wringing his hands. "I was just, ah, the professor and I were—oh, blast, Professor, we hadn't even gotten into asset allocation!" He shook his head in dismay. "I got so carried away, I never even answered your original question. My apologies, Professor."
Byleth frowned. "Wasn't all of this about asset allocation?" they asked, confused. "I need to allocate six percent into the account. Right?"
"No, but you see, after that..." Dimitri looked at the chalkboard behind him, cluttered with figures and percentages and arrows that had made sense at the time that he drew them, and room for nothing else. "You have to invest the funds."
"Investing?!" Despite its not being his classroom, Caspar burst through the door behind Felix, with a sleeping Linhardt strapped to his backpack like it was a baby carrier. "Oh, man, I love investing! Linhardt taught me how to do it."
"Oh, that's fantastic!" said Dimitri. "You see, I don't have much experience with it, myself, since I have managed accounts. Perhaps you or Linhardt could teach us."
"You don't need to be taught how to invest," said Felix. "It's simple. Basic. Choosing stocks should be done with instinct, not theory."
"Er," said Dimitri hesitantly, "what?"
Byleth parsed the information pouring in from these three sources carefully. "So," they realized, "I have to invest the money in my 401(k) in the stock market?"
"Not exactly, but I would highly recommend it," Dimitri said. "Your assets will grow exponentially if invested in a growing market rather than sitting unused in a savings account. For the average worker, this exponential growth is the only way to accrue enough money to retire by the time you reach your sixties or seventies."
"That's horrible," Byleth said in shock.
"Yes, agreed," said Dimitri. "Capitalism is a passive crime against the poor and working class. All I can do is give you the tools to seize your own financial security."
"Aren't you the prince of an entire country?" asked Caspar.
"What?" said Dimitri. "I don't remember what we were talking about. Anyway, Professor, once you have contributed funds to your account, you will have to choose how to invest them."
"With my instincts," Byleth recalled with a nod.
Dimitri drooped. "No, do not do that. Please do not do that."
"Why not?" Felix challenged, folding his arms. "There's no better way to choose stocks than to invest in what you feel will succeed in the market. That's how I chose my investments."
"What did you choose?" Byleth asked, moving their pen to take notes.
"Swords," said Felix.
Byleth wrote swords, then looked up expectantly. Felix was moving to the back of the classroom to take his seat.
"S... swords," repeated Dimitri in horror. "Just swords?"
Felix glared at Dimitri. "What need would I have for anything else?"
"It's not about what you need, it's about..." Dimitri scratched his head. "I don't know what it's about. The stock market is very confusing, actually."
Byleth turned around in their seat, arm over the back of the chair, and called out to the half-filled classroom, "Does anyone here know how the stock market works?"
Ingrid, Ashe, and Dedue all exchanged clueless looks. Ashe laughed sheepishly. "We're all the poor kids," he realized.
"Indeed," said Dedue. "The stock market is a rich people problem."
"For real," Ingrid groaned. "Don't get Sylvain started on this. He won't shut up."
"Well, uh," said Caspar, setting down his backpack and its cargo on the floor, "do you know what a stock is?"
"Not really," said Byleth.
"Okay, I can dumb it down for ya. I'm great at dumbing stuff down." Caspar clenched his fist and pounded it into his opposite palm. "Let's say I've got this really great idea for a business. I figure out this cool metalworking technique that lets me make the best swords in the world."
"I invest," Felix interjected immediately.
"Exactly what I need!" Caspar said, pointing double fingers at his investor. "See, I have this cool metalworking technique, but I need money to buy the ore, and the workshop, and the tools, and food, and rent, and everything! Eventually I'm gonna be selling so many swords and rolling in the gold, but for now, I'm flat broke. So I tell Felix, 'Hey, if you give me 10,000 gold, I'll give you 10% ownership of my business.' And that ownership's granted in units called stocks."
"But what is 10% ownership of a business worth?" Byleth asked, frowning.
"Exactly! That's the big mystery." Caspar thumbed over his shoulder at Felix. "If Felix invests in my business, he's betting it's gonna be worth more in the future than it's worth right now. Then, he can sell that 10% ownership to another buyer for more than 10,000 gold, and make a profit!"
"But what if the business flops?" Dimitri worried.
"Yeah, then he's out 10,000 gold. I could totally screw it up and my swords are bogus," Caspar agreed. "Then my business is worth zilch. Ten percent of zilch is nada."
Byleth quickly but carefully wrote 10% zilch = nada on their paper. "So it's gambling," they said.
"Yeah, but less fun." Caspar shrugged and kicked Linhardt lightly, who did not stir from his slumber. "Honestly I just kinda go along with what Linhardt tells me to do. He researches the good stocks and I just put my money where he says."
Byleth nodded. "And Felix picks good stocks with instinct," they said. "And his instincts say swords."
"But here's the problem," said Sylvain, leaning in the doorway five minutes late to class with a Starbucks mocha latte in hand. "Even outside of having stock in an individual company, you have to consider the industries of all your stocks."
Ingrid groaned and folded her arms over her head. "I told you not to get him started on this," she warned. "I told you."
"You don't want to keep all of your eggs in one basket, obviously," Sylvain said. "If Caspar's sword business folds, as long as you're investing money in lots of other sword businesses, too, you'll still have a net win even if you lose a little money on that venture. But what happens if we invent a new kind of weapon—let's say, some kind of handheld projectile emitter powered by combustion—"
"Sylvain, you are carrying a Starbucks coffee, and we are talking about the formalized stock market," Dedue said. "You can say 'gun'. We have committed enough anachronistic atrocities already to permit it."
"Right, okay. Thanks, Dedue." Sylvain shot him a finger gun and a wink. "So when guns get invented, the entire sword market is gonna tank. People won't be buying swords when they could be buying the superior product, guns."
"Never," Felix said with gritted teeth.
"And Felix's stocks are all gonna drop," Sylvain went on. "That's why you have to diversify your portfolio across multiple industries. If you want to be sure you win a horse race, you've got to bet on every horse."
"That," said Ingrid, "doesn't make any sense. That's the stupidest saying I've ever heard."
"It works for the stock market," Sylvain said with yet another wink.
"So... you have stocks in every company?" Byleth marveled. "That seems expensive."
"Not every company. Just a few big companies in all the primary industries," Sylvain explained.
"Huh," said Caspar, impressed. "That's not how Linhardt does it. I think. That seems really smart, though."
"How does Linhardt do it?" asked Byleth.
To find the answer, Caspar set about lightly slapping Linhardt's cheeks. It would be another fifteen minutes at the least before he was roused.
While they were waiting for that, Byleth turned to Dimitri. "How are the stocks chosen for your accounts?" they asked.
"Well, you see," said Dimitri, scratching the nape of his neck with a nervous finger, "my assets are in what is known as a managed account. This means that everything will be taken care of for me, according to my general preferences for risk and reward."
"In broader terms," said Sylvain, "His Highness is super rich, so he pays a financial expert at an investing firm to directly manage his asset allocation for him. That takes a percentage cut out of your earnings, for the peace of mind of having an expert handle your money for you. It's usually only a smart choice if you come into a huge sum of money and really want an expert's help. Technically, you should speak to a financial advisor about any investment choices you make if you have questions, but nobody's got time for that. But if we're talking big money, it's really for the best to hand over a cut of it to an expert and make sure it gets handled correctly."
"I do not have big money," said Byleth.
"Of course not," Sylvain said. "That's why you're taking financial advice from a bunch of teenagers instead."
With a thunder of footsteps, Annette barreled into the classroom, crying out, "I'm so sorry I'm late, Professor!" As she was rattling off the harrowing tale of her late night studies for the coming weekend's exams bleeding into an early morning rise and a naïvely deactivated alarm, Mercedes entered the room behind her, smiling sweetly and relatively unrepentant for her tardiness. Finally, Annette's attention settled on the fact that Byleth was sitting at one of the students' desks, while Sylvain stood at the front, erasing a mess of figures from the chalkboard. "What exactly are we learning today?" she asked.
"How to diversify your stock portfolio," Sylvain replied. "Let's start with the core industries you should be buying stocks in as a young investor..."
"Wait, you pick your stocks individually?" Annette said. "I just pick a mutual fund and let them handle it. Mutual funds are organized by finance experts and have stocks all across a wide variety of markets, wider than any one investor could individually buy into with a typical savings. The idea is that lots of small-time investors pool their money together to own tiny fractions of stocks in lots and lots of companies. It's the easiest way to diversify."
"Hey, that's a smart strategy, Annette! Especially if you want a more hands-off approach," Sylvain praised. "With mutual funds, you don't have the freedom to choose exactly which stocks you buy into, because they're all selected by a plan manager. But on the other hand, if you're not interested in figuring out which stocks to invest in and just want to make sure your portfolio stays diversified so your savings can steadily grow, they're a great option. Most mutual funds also have a small membership fee just to keep the ship running, but nowhere near the fees for a personal financial advisor to manage your account like His Highness's. I'm talking fractions of percentages of your earnings. Negligible stuff, for the convenience of an automatically diversified portfolio."
"There are all sorts of mutual funds out there, and you should research which ones you want to contribute to based on their management plan. My favorites are mutual funds that are tailored to the year you plan to retire," Annette added. "That way, the fund will maintain the perfect ratio of stocks and bonds for opportunistic investment during the early years of your career, to financial security as you're getting ready to retire and take withdrawals from your accounts."
"Whoa, Annette, slow down," said Sylvain. "We haven't even talked about bonds yet. That's a whole other step of diversification."
"Diversifying across individual companies, industries, and now more?" Byleth said wearily. "This is a lot to take in."
"See, that's why I prefer mutual funds," Annette said. "Leave it to the experts to figure out the details for me."
"There are other ways of making investments other than in stocks," Sylvain said. "One popular way is to invest in bonds as well as stocks. Bonds are money loans to and from the government, with constantly changing interest rates on those loans. People make bets about whether interest rates are going to rise or fall, and buy bonds that they think will appreciate in value, and sell bonds that they think are at the maximum value. You can buy shares into these bonds almost like you can with stocks. They tend to have a slower growth rate than stocks, so you won't make as much money, but they're also much more stable, meaning that the bond's never going to completely fall flat like a stock can. You might not make as much money, but you won't lose as much, either, if things go wrong."
"I don't want to give my money to the government," said Byleth. "I think the government shouldn't have money."
"I agree," said Mercedes. "That's why I classified the bulk of my Bartels assets as a 501(c)(3) certified tax-exempt private foundation for the betterment of queer youth. As long as I donate a certain percentage of my annual profits to that cause, my investment income is only taxed at a nominal 1.39% rate, compared to the 25% marginal rate I would be charged otherwise. And I'm free to use the remainder of my profits for any operational expenses for the business."
"Wait, Mercie," Annette cut in, wary, "does this have something to do with why you keep giving me annual cash gifts of 15,000 gold?"
"Well, you're a queer youth, aren't you?" Mercedes gave a glowing smile. "Corporate tax fraud is so easy. Anybody can do it!"
"Mercedes, I know I've said it a million times before to a million different girls, but this is why I swear to you that I think you are the most beautiful and sexy woman I've ever met," said Sylvain.
"Thank you!" Mercedes said, chuffed. "You won't be receiving an annual cash gift of 15,000 gold no matter how much you compliment me, however."
"What if I kiss Dimitri square on the mouth?" Sylvain asked.
Dimitri had turned white as a sheet while Mercedes detailed her illicit charity scheme with her unflappable smile. Here, the color flipped instead to beet red.
Mercedes hummed thoughtfully. "I'll think about it."
"I'll kiss any boy. I'll do it," Sylvain promised. "Ooh, ask me to kiss Dedue. He's hot."
"Do not," said Dedue, who had standards.
"Can someone please tell me how to diversify my investments without giving money to the government or committing tax fraud," Byleth asked their very queer class gently.
Dimitri, eager to change the subject, picked the lesson back up quickly. "I believe real estate is a common alternative investment choice," he said. "Real estate works on several different levels. Firstly, all housing and land generally appreciates over time in pace with inflation. Secondly, you may choose to purchase a house in poor condition and repair it yourself, selling for a profit, although this often requires not only time and skill, but high up-front costs and a high risk of failure, depending on market conditions when you move to sell. The third option is to acquire housing in order to rent it out to tenants for a higher price than the cost of the mortgage, taxes, and utilities for a steady cash inflow."
"You're telling me to become a landlord?" Byleth realized. "You want me to be a landlord?"
"Er, no, as I've said, I believe capitalism is a hellscape and landlords are the scum of the earth," said Dimitri. "I am just saying."
"Isn't feudalism literally just an economy of landlording?" Ashe whispered to Dedue. "We don't even live in a capitalist society. We live under feudalism. That's literally just law by landlords. As king, His Highness will be the highest lord in the land. Does he even know what he's saying?"
"Please do not break the fourth wall," Dedue said back to him.
"You're the one who keeps breaking it," Ingrid muttered.
"There are other ways of investing," continued Dimitri, "including investments in material assets such as gold—ah, I mean, the physical substance, not the currency. However, that leads me to my next point, in which you may invest in other currencies. That is a very complex science however, having to do with the strength of national economies in comparison to one another. Some day, perhaps there will be virtual currencies, created through an artificial scarcity of a complex algorithmic nature, requiring powerful machines to decode its virtual identity in order to bring it into existence. Such a thing would be a catastrophic and senseless drain on resources for the energy required to operate the machines, all for a very volatile investment that only fools would think to invest in after their initial boom."
"Yeah, the new cool meme is to mess with short-sellers managing enormous hedgefunds using lazy and irresponsible strategies," yawned Linhardt.
"The... the what?" Dimitri said, already numb.
"So," said Linhardt, rolling to his feet with a wide stretch, "the rich and powerful have arrangements with the stock market where somehow it's legal for them to borrow huge amounts of stock from companies and just promise to give it back later. But what they do while they're borrowing the stocks, is they sell it. They're betting that this stock is at a peak in the market right now, and they're expecting it to drop in just a little bit. So they sell the stock that they borrowed, wait for the price to fall, and then buy that stock back at a lower price. They can give the stock back to the company they borrowed it from, and make a profit."
"How is that allowed?" Byleth wondered. "Why does the company just give these people stocks for free? I want stocks for free, I think."
"That's not the part that matters," Linhardt said, impatient. "Yes, obviously, what they're doing is dubious at best and predatory at worst, since they're actively campaigning for the downfall of a business in order to drive their own profits. But that's where the counterforce of organized vigilante investors comes in."
"That's me!" Caspar chimed in. "I mean, I'm one of them. But, like, a big one! Because I'm rich."
"The common man, if united, can bear witness to a hedgefund making one of these kinds of moves, then we immediately buy into the stock that they just predicted would fall in the near future," explained Linhardt. "The more people you have buying your stock, the more your stock is worth. So, by buying en masse into the company they thought would fail and inflating its value, we've just forced this hedgefund to take a loss when they need to return the stocks they borrowed, because they sold at a lower price and have to buy back at the higher. This is all, of course, highly ethical, because hedgefund managers are corrupt billionaires who deserve to be taken down a peg."
"You scoundrel!" came a voice from the corridor outside the classroom. In the doorway, the inhumanly Greco-Roman face of Lorenz Hellman Gloucester contorted with rage as he pointed an accusatory finger at Linhardt, who blinked sleepily his way. "So you are one of the criminals behind the scheme that ruined my father's financial standing!"
"How is it criminal?" Linhardt yawned. "Your father was trying to artificially drive the price of the GameStop stock down. We were trying to drive it up. Either we're both criminals, or nobody is, and that's just the market showing her invisible hand."
"What is the invisible hand of the market?" Byleth asked Sylvain quietly.
"It's fake," said Sylvain. "You know how, when teenage girls buy a fake Ouija board to spice up a sleepover and everyone screams that they didn't move the plectrum when it starts to move, but obviously someone in the group made it move and just won't 'fess up?"
"No," said Byleth, then, "wait, what?"
"That's the same thing as the invisible hand of the market," Sylvain went on, undeterred. "People are making the market bop up and down every day. Mostly rich people. Rich people moving money makes the market do what it does, and they point at the invisible hand so nobody keeps looking at them."
"I have heard your lies and slander from outside the room," Lorenz continued on his tirade against Linhardt's stonkmemeing. "How can you call my father's bankruptcy ethical?!"
"Lorenz, I don't think you know what 'bankrupt' means," Sylvain called out. "Your dad isn't bankrupt from this one bad investment. And you know why?"
Lorenz blinked in surprise, then combed his horrible haircut back into place, straightening his spine. "Why?" he demanded icily.
"Because," said Sylvain with a wicked grin, "like a smart man, he diversified his portfolio."