A survey by Prudential Research calledÂ The African American Financial ExperienceÂ finds that one of the reasons blacks shy away from financial professionals is because they donâ€™t feel they have enough assets.
This is consistent with the belief Iâ€™ve heard throughout my career as a financial journalist from varied groups â€” that investing is for the wealthy.
To prove that investing is not beyond the reach of us “99 percenters,” weâ€™ve asked three financial experts how they would invest $1,000 if they were a millennial (born between 1982 and 2004), a Gen Xer (born between 1965 and 1982), or a baby boomer (born between 1945 and 1964).
Rianka Dorsainvil, CFP, is president and founder of Your Greatest ContributionÂ financial planning firm: Dorsainvil also serves as 2015 President-elect of the Financial Planning Associationâ€™s NexGen community, where she focuses on the cultivation of the next generation of financial planners, and was recently recognized by Investment News in their 2015 list of top â€œ40 Under 40â€ financial services professionals.
Many millennials seem to have the belief that they cannot afford to invest. What would you tell them?
If your bills are being paid and you have some cash in your emergency fund, itâ€™s safe for you to start investing. For my millennials who say they do not have any money to invest, I challenge them to keep track of their spendingâ€”every dimeâ€”for two weeks, and see if their perception about not having any money will change. The money we spend eating out, for example, can add up and be a source we can use to start investing.
How would you tell a millennial to invest $1,000?
If I had $1,000 to invest, I would invest it into a Roth IRA. I am in favor of Roth IRAs because when investing in this vehicle your contributions can grow, tax free, and you can generally make withdrawals tax and penalty free after you reach age 59Â 1/2. You can open up a Roth at your local bank or financial institution such as Charles Schwab,Â TD Ameritrade, etc. As for what I would invest the $1,000 in once it was in a Roth account? An index fund. The most widely known market index is the S&P 500 (SPY).
Lazetta Rainey Braxton, MBA, CFP, founder & CEO, Financial Fountains: Braxton is also on the board of directors forÂ The Association of African American Financial Advisors.
Many in Generation X feel that they have to make the choice between childcare, their childrenâ€™s education costs, and saving for their own retirement. What advice would you give them?
Make sure you think of yourself. If we overspend and donâ€™t invest, we will have another generation where children would have to take care of parents. This generation has to really think about how much they are able to realistically fund when it comes to their childrenâ€™s education. What boundaries do they need to set? Long-term care for parents is also something this generation must contend with. They need to have a tough conversation with their parents so they can really quantify what the financial impact will be on their own household.
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