And the time is now, says the Board. Looking at current market volatility, Hobson sees only openings for aggressive, opportunistic investors. “Now we’re in a situation where some of the froth is out of the market. And when you think about how wealth is created, it’s when others are fearful. There’s a real message that can be told to investors about this being the time to invest if you’re moving money into the market slowly and over the long term. In short, the time to invest is when the market is relatively low, and thus has a greater potential to rise, not when it’s relatively high and more prone to downturns. Hence the old adage “Buy low, sell high.”
STRATEGIES FOR THE FUTURE
So where do we go from here? Despite the market fluctuations in recent months, financial analysts still point to the stock market as a primary vehicle for creating and growing wealth. And if African Americans don’t start to investigate the market in greater numbers, the Board believes they risk being shut out of that wealth building vehicle forever.
The first step, says Boston, is to assess your resources and devise an investment strategy. “Define certain goals and define an investment strategy that would allow you to meet those goals,” says Boston. “Look at your current income to determine whether that will allow you to do that and if not, you need to come up with ways to supplement that income, then develop a sound investment blueprint that is in line with those goals.”
Simms says African Americans must “develop an investment rather than a savings mindset. Since the trust in professional brokers is low, it seems we need to spend more time learning about investment options so that we increase our comfort level dealing with professionals. This way we can carefully evaluate options presented to us by brokers,” she says. “Also look at forming investment clubs. It forces you to learn more about investment options and has that aspect of peer group pressure because you have to keep at it.”
In addition to urging blacks to participate in company-sponsored 401(k) plans, Andrew Brimmer recommends that novice investors who are ready to take the plunge, do so initially through mutual funds rather than individually managed accounts. “The typical black investor does not track the market. And in order to manage your own funds and to be active in the market and give instruction to brokers, you would have to spend a great deal of time researching,” says Brimmer.
The Board’s consensus: if African Americans are to contend and be economically viable well into the next century, the time to act is now.
“It really doesn’t matter what you’re saving for as long as you’re saving and investing,” says Hobson. “We hope this survey acts as a wake-up call for black America because we have to take responsibility for our financial future. No one else will.”
Brimmer predicts modest gains for African Americans
The American economy is experiencing a marked slowdown and the moderate pace of