By Andrea Juarez
A recent Black Investor Survey reported African Americans save less money than whites and only 57 percent of Blacks invest in the stock market or stock mutual funds, compared to 81 percent of Whites. The survey was released by Ariel Mutual Funds and the Charles Schwab Corp. in October 2007, and included 500 Blacks and 500 whites earning more than $50,000 annually.
Some metro Denver African Americans are raising those statistics via money clubs and investment groups, coming together monthly like a book club but addressing their financial lives instead.
In January 2008, local author J.D. Mason opened up her Aurora home for the inaugural meeting of the Opulence Group, a money club for local Blacks to discuss personal financial management and wealth building.
“We have to learn how to make our money work for us,” said Mason. “There are ways to build money and we need more control of our dollars.”
At the Opulence Group’s first meeting, 13 women and one man sat comfortably around Mason’s living room, snacking and drinking wine. The setting was laid back, but Mason was serious and voiced her expectations – they would meet once a month for one year and participants may only miss three meetings.
Enthusiasm was high and a few shared their motivations for joining.
“I need to create a household budget, build for retirement, and learn to do credit repair,” said one participant. “I never learned how to manage money from my parents. White people do that.”
“The Black dollar is worth trillions but when we look at us, many are living paycheck to paycheck,” said another. “Most of us did not grow up with money. But now, we got to a point where we could afford things, so now what?”
There were several affirmative headshakes and “uh-huhs” in response.
The Opulence Group decided to have guest speakers on topics such as financial planning, taxes, life insurance, and investing in stocks. They also agreed on homework for the next meeting – tracking all their spending for one month.
Saving Eggs In Multiple Baskets
Four weeks later, 10 people reconvened at Mason’s home. They spent the first half of their meeting talking with Gregory Anderson, a certified financial planner and the founder and CEO of GRAnderson Wealth Management Group in Cherry Creek.
“A lot of times we save. We save for a car, college education, and to purchase a house. We can see the end and get help,” explained Anderson. “Retirement is different though. You can’t borrow for retirement, so it’s on you.”
According to Anderson, the three sources for building retirement income have been personal savings, social security and employer retirement plans. His key point in regard to saving for retirement and investing generally was cautionary: “Don’t put all your eggs in one basket; diversify your investments.”
After Anderson’s presentation, one participant reluctantly admitted the information was daunting, saying, “It was hard for me to hear about saving, because of what it’s going to do to my everyday living.”
For the remaining meeting, the group reported on their homework. One participant spent $56 at Starbucks over a month, while another went over her budget by $500 because she had a bad day and went emotional shopping. Even worse, many hadn’t totaled their expenses for fear of what they’d find. There was, however, one proud mother who happily reported she spent $2,000 a month for herself and her family, resisting temptations like going out in excess with friends, in order to save money.
According to the 2007 Black Investor Survey, the median savings for African Americans per month was $182, while whites save $261.
The group offered each other tips such as creating grocery lists, eating out less, leaving credit cards at home, and paying down high-rate credit cards. With much work still to be done on managing their finances, the group decided they will spend the last six months of the year learning about the stock market and other investment mechanisms.
Investing In The Market
For over 10 years, 67-year-old retiree Eva Holloway has been investing in stocks through Across The Miles (ATM), an investment club for African-American women. Every third Sunday of the month, she dials into a conference call to discuss the stock market and the group’s investments with the club’s seven other members, including her three daughters and others from Texas, Tennessee, Georgia, and Florida.
“I’m the oldest member of the club,” said Holloway, who lives in Denver. “When we first started investing it was foreign to us, but we’ve helped each other learn.”
ATM, formed in 1997, is formally organized though the National Association of Investors Corporation, an organization that provides investment information and support to investors and investment clubs. Members pool their money, $50 a month in dues, and collaboratively decide which stocks they will buy and when they will take gains and losses. Each month the group does a “stock study” where they evaluate the financial health of a company and its growth potential. Like most investment clubs, ATM focuses on long-term investing (holding a stock for a year or longer) versus short-term (less than one year) to give stocks some opportunity to rebound, said ATM treasurer Linda Holloway, Eva’s daughter from Dallas.
“Compared to the rest of the economy our stocks are holding up. As of March, our annual rate of return has been around 7 percent,” said Linda, who also executes the club’s trades. “We’ve never gone in the negative. Some of the stocks are down and some are up. That’s why it is so important to have a diverse portfolio.”
Once a year, the group holds a “face-to-face meeting” in a city where a member lives. They have some fun, but they also dig in deep, reviewing their portfolio and several stock studies. They also share information from investment seminars and other resources. Last year, the group met in Dallas, and they plan to meet in Orlando, Fla. this August.
“It’s been a learning process for all of us,” admitted Eva, “and a great opportunity for us and our families.”
Her husband, three daughters and a son invest in the stock market. She’s also working on the next generation, her grandchildren, by giving them stock for Christmas and birthdays.
“I’d rather spend my money on stocks,” said Holloway. “This way they can learn how to make money grow.”
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