Credit: iStock Photo
|
Investing may feel as if you’re taking a leap into unknown waters, but it isn’t that scary if you consider the long-term view. Think of yourself as a farmer who plants seeds, feeds and waters them, then waits for beautiful flowers to grow. You start small and reap financial rewards over time. Now the long-term view for those who don’t plant those seeds today is truly scary, according to Mellody Hobson, president, Ariel Capital Management, LLC. “Only 57 percent of Blacks own stocks or mutual funds, compared with 76 percent of Whites. In short, large segments of the Black community are simply not participating in a serious way to build wealth to secure their retirement,” says Hobson, citing new data from an Ariel survey. There’s no time like the present to get growing. Here’s how:
Create a cash cushion first.
Put aside three to six months of savings to cover living expenses for emergencies. Start with $25 to $50 per pay period, and let that grow.
Join an investment group.
Ann McNeill, 53, of Miami, says that ten years ago, despite having two degrees, when it came to financial savvy, “I thought a portfolio was a briefcase.” Then she and some girlfriends formed Sisters Together Achieving Financial Freedom, applying fundamentals they learned through the nonprofit organization BetterInvesting. With modest monthly contributions of $25 or less, the group, now ten, have amassed a portfolio of more than $50,000. McNeill, who today has a growing personal portfolio as well as a SEP IRA, a Roth IRA and a 401(k), credits the group with boosting her confidence as well as her bottom line. Membership in BetterInvesting is $6.95 a month, which includes its monthly magazine. Plug in your zip code at Better-investing.org to find free investment classes.
Buy stock through DRIPs or DSPPs.
DRIPs (dividend reinvestment plans) are automatic investing programs offered by public corporations. Investors can purchase one share at a time and reinvest the dividends to buy new shares. With DSPPs (direct stock purchase plans), you avoid broker’s fees and buy from the company. Get a list of the companies that participate at Web sites Computershare.com and Directinvesting.com. Rules and fees vary with each company, and some require that you purchase the first share through a discount broker like Etrade.com.
Get company stock.
Many corporations offer discount stock purchase plans for employees, starting with as little as $25 to $50 deducted from each paycheck. Martell Dawson, a forklift operator who invested half of each paycheck in Ford Motor company stock over 43 years, did well enough to give away $3 million in scholarships. If you work at a large successful company, ask your HR representative how to get started. But put no more than 20 percent of your hard-earned cash into one single stock, no matter how successful it is.
Go online.
Investopedia.com provides information on top blue-chip stocks. You’ll want two or three of these “bulletproof” companies (like General Electric and Johnson & Johnson) in your portfolio. Set up an automatic investment plan through Sharebuilder.com or Buyandhold.com. At Sharebuilder, the What If You Had Invested? tool showed that if you had invested $100 monthly for ten years in Procter & Gamble, your $12,000 would now be worth $29,000. That’s more than a 110 percent return. Not bad for a small investor.
Brooke Stephens is a financial adviser and the author of Wealth Happens One Day at a Time (HarperCollins). She lives in Brooklyn.
Have some investing tips of your own? Share them below.
RELATED LINKS:
Try these side hustles for fast cash »
PHOTOS: Side hustles for summer »
Expert advice on getting a job you love » |
