Stocks And Sisters: Investment Strategies For Black Women - Brief Article

THERE are two types of Sisters in this world--those who invest and those who should invest. And for the Black woman looking to gain her piece of the economic pie, entrusting your hard-earned money to stocks, bonds and mutual finds are among the best ways to slice it.

When it comes to playing the stock market, middle-class Blacks--particularly women--who have the money to invest have historically lagged behind their White counterparts. Although statistics and surveys show that Black women express a strong interest in the financial pages and in Wall Street, there's reluctance to participate when it actually comes to opening the checkbook.

As a result, a large number of Sisters have missed the greatest wealth-building American history. The U.S. economy is booming, the stock market is hitting record numbers and the rich are getting richer. But according to financial experts, Black women have been hesitant to invest in the stock market because they fear loss, or because they're more inclined to put their money into passbook savings accounts and short-term CDs.

But it's never too late to plan for the future.

Economic experts also say there's a direct correlation between investing, wealth and power. Investing creates the wealth that will give the Black community a stronger economic and political voice, says Juanita Carter, assistant dean of Clark Atlanta University's School of Business.

"If we're going to have economic empowerment in the Black community, then we need to be a part of what other races, particularly White Americans, have been doing for years," says Carter, who founded an investment club for Black women five years ago. "With wealth comes power, whether it's political or economic."

Fundamental Truths

To reverse the non-investment trend and participate further in America's economic prosperity, Sisters should become aware of some fundamental truths: Women, in general, are different from men when it comes to investing. Therefore, women should have different investment strategies than men. There's no reason the investments should be less lucrative, just different.

For starters, says Carol Davis, president of the Coalition of Black Investors (COBI), based in Winston-Salem, N.C., women tend to live longer than men, and have more time to reap the rewards from their investments. In addition, most women make less money over their working lifetime than men. Maybe you took time off to have kids, or maybe you just don't make as much as your male co-workers. For that reason, women may need to invest more aggressively in stocks that will yield a higher return.

Plan For Retirement

The best way to begin investing is to start saving for your retirement. Most companies offer employer-sponsored retirement plans that are simple to use and provide a good start for building an investment strategy. The most standard plans are the 401 (k) or the Individual Retirement Account (IRA). Some companies include the option to purchase stock, while others have private retirement plans.

Diversify Your Investment Portfolio

To build the best portfolio, diversify your investments. Play it safe with blue-chip, Fortune 500 company stock. Take a risk with more volatile, high-tech companies whose stock value is based on future projections. A recent COBI census found that Black investors are banking on tech stocks like Microsoft, Lucent Technologies and AOL. You may also want to consider a mutual fund. A mutual fund can reduce overall risk by having many different investments. When some of your investments are down, others may be flying high.

Educate yourself about the market and consult a financial planner or investment advisor before you invest. They can help determine your needs by looking at your age, income, goals, assets, liabilities and monthly expenses.

Investment Clubs

Financial experts say investment clubs are also becoming a popular way for Sisters to plan financially for the future. Women's investment clubs across America continue to outperform all-male clubs by as much as 20 percent. Clubs consisting of family members, sorority members or friends meet regularly to plan investment strategies and increase their knowledge of the financial pages. "The benefit of an investment club is that it combines the social aspect with the educational benefit of coming together and sharing information," says Davis, who's been in an investment club for more than a year. "It really demystifies the whole process."

The main thing to remember when choosing to invest is to keep a steady hand. Once you set your goal, stick to it. The stock market will go up, the stock market will go down. The best players ride the wave and realize the greatest returns on their investments. If you make a mistake, try to recover as quickly as possible, but don't give up.

It's also important to start investing as early as possible. Put your money to work as soon as you can afford it. The longer you wait to begin investing, the more money you'll have to put away. Consider this: A 20-year-old starting out investing $20 a week can have $1 million at retirement. If you wait until you're 30 years old, it'll take $55 a week. Don't let too much time tick away, Sister. Plan now for the rest of your life.