Brimmer points out that it’s an excellent time to invest for those who have the assets and are prepared to take a risk. He says equity prices right now are depressed and losses attributed to a weak economy are less likely. “I would advise a person who is a newcomer or a fairly inexperienced investor to follow the mutual fund route at this time rather than trying to pick stocks on your own.”
Mekdes M. Clark, a 35-year-old senior claims processor for AFBA, a financial services and insurance provider, is one investor who remains concerned about market volatility. She says losing 10%312% in her 401(k) last year was a “wake-up call.” The Clarksville, Maryland, mother of two used to contribute 5% of her pre-tax dollars to her plan and allocate 100% of the funds into blue chip stocks and hope for the best. Over the last year she’s increased her contribution to the maximum 15% and, though she hasn’t changed her 401(k) allocation, she’s bought into a mutual fund, opened a Roth IRA, and become a more informed investor. “It forced me to go and educate myself more, diversify,” she says. “Basically, it forced me to look at every aspect of investing.” Clark says she’s not yet confident enough in the market to purchase any stocks directly, but would opt for a money market fund or bond fund.
Though not a professional analyst, Clark doesn’t expect the bull market to charge for another two to three years. “I can’t imagine it turning around this year,” she says. However, this doesn’t dismay her. “For me, it’s the long-term. I’m just going to hold tight.”
It’s always a good time to invest. It’s just a question as to what investment vehicles are best for each individual. Though none saw the Enron scandal coming, it’s a painful reminder that investors must be vigilant stewards of their portfolios rather than adopting a “buy and forget” strategy. The economists also point out that it may be more prudent to eliminate outstanding credit card debt prior to investing, and that individuals should never invest money that may be needed in the near term. The Board recommends being an active investor and avoiding overweighing your portfolio in a particular company or industry.
“What tangible grassroots methods can we use to increase business ownership among black Americans?” — E. Lowe, New Orleans
The recession has been a difficult one for many African American entrepreneurs. Because many of their businesses are mainly concentrated in the services sector, their ventures are more closely tied to the consumer and are less sheltered than big businesses from fluctuations in spending and other economic indicators.
Harold Leffall is one of those entrepreneurs. As president of Leffall Employment Agency in Oakland, California, a firm that provides temporary staffing services, he saw the effects of the slowdown up close and personal as projected revenues at his company dropped dramatically. “For the past four years, our business has almost doubled — up until 2000,” he says. “We had a slight increase in 2000 —