Jesse in the Media

      I don’t want to be old, poor and broke. I don’t know any African American person who does. Yet, I know too many people who’s frivilous spending will lead them straight to that hellacious path. There is nothing fun about not having money and no joy in contemplating a doubtful financial future. So after careful study, and believe me, I’ve considered all options, I’ve discovered that the surest way for African Americans to avoid this horid outcome is to invest in the stock market through a mutual fund or tax deferred compensation plan. Your days of just hoping your tangled finances will magically work themselves out must come to an emphatic end. Financial freedom is the final frontier. So open your eyes to tangible prosperity or live your life of financial doom. Your destiny is in your hands.

      There are two choices to make when it comes to establishing your financial security. You can do absolutely nothing at all and let your financial security be at the mercy of whatever circumstances arise. Or you can start to learn about money and begin to build your financial security. People who do nothing end up with nothing. You can’t convince me that there isn’t a person who does not need at least some of his or her money in a retirement portfolio or savings plan. Establishing financial security is not an easy task, but you’ve got to do it. Commit yourself to success by consciously setting aside time to make a plan, change your spending and saving habits, and then sticking to the plan.

      I know all the arguments: “I need the income now! “I’m too old to start saving now, I need all the money I earn to live off of now” “I have social security benefits.” But when retirement years kick in, then what? You can’t sell your furniture and live off the returns. You can’t exchange the expensive perfume, your old top of the line fashions or any other wearible item you thought made you look rich. Such cheriched items are depreciable. You probably won ’t get half of what you spent on them trying to sell it. You say you’ll sale the home when the kids move. And live where? Rent is skyrocketing daily. Chances are the mortgage you’re paying now will be less then the rent you anticipate paying in your retirement loft. You know you can’t confidently look me in the eye and tell me you are ready for retirement, so stop fooling yourself.

     Like it or not, medical science is keeping people alive longer. Old age isn’t about laying back in a comfy country cottage. When I see seventy-five year old people today, generally they have tennis rackets or golf clubs tucked under their arms. Your needs and interests won’t diminish with age. More years on the planet means the necessity for more money.

    The United States has been accused of being a nation of slackers when it comes to saving money. Those accusations are well deserved. We under-save compared to the rest of the world. However, no other country in the world had a baby boom like ours after World War II. They are older than we are. But as more Americans hit forty five years old, watch and check the savings rate in America kick in!

    “But I have a savings account,” you argue. Not good enough. A $10,000 investment on November 6, 1957 would be worth in excess of $1,600,000 as of June 30, 1997 on a fully reinvested basis. On the same terms over the same time period, a savings account would be worth less than $92,000.

    Investment in stocks through a mutual fund or a tax deferred savings plan like the IRS 457 plan, are the best investment methods.

    “But stocks are so unreliable. They keep going up and down,” you argue. People don’t appreciate or understand volatility ( the ups and downs of the market) and it frightens them as a result.

     However, from 1982 to 1987, the stock market was up 250%. In one or two memorable days, it was down 24%. Since 1940, we’ve had twelve bull markets (stocks on a general incline in value) in this country. The average bull market lasted over three years and was up 100%. In that same time frame, we’ve seen eleven bear markets (stocks on a general decline in value). The average bear market lasted less than a year and was down 25-30%.

    When looked at rationally, and you’ve got to be rational when facing your financial future, the stock market is a wonderful place to be. So be rational and take advantage of it.

     Well known economist, Roger Ibbostson tells us that “if we had invested a dollar back in 1925, because of inflation that $1.00 would today be worth $7,446. In government bonds, today’s value would be $17.99. If we had invested in corporate bonds, we’d have $27.18, today. But in the stock market, we’d have $517.50. What we need to be reminded is that only $25.89 of the $517.50 can be credited to price appreciation.” The balance came about only because of dividend growth and dividend reinvestment. This is the best reason for buying and holding equity securities that can be told. Many investors treat liquidity like their best friend, when in fact, liquidity is both expensive and disruptive to the best plans.

     “Why can’t I just guess when the market is good? Why must I invest consistently?” you ask.

      Because the key to investment success is time, not timing.

      One thousand dollars in Treasury Bills bought forty years ago is worth $7,200 today. The same $1,000 invested in the stock market is worth $109,000. Yet when the top thirty-four months of market action are removed from these astounding market results, the $1,000 in the stock market
is worth only $6,900, less than Treasury Bills! Anyone who thinks he can pick the 3 and a half weeks a year when the markets action takes place is deceiving himself.

       Your best bet is to continuously invest and capitalize off of dollar cost averaging. Dollar cost averaging has only two requirements: patience and a fundamental belief in the continued prosperity of the American system. The greatest single obstacle to financial success in America today is lack of patience. But patience is a virtue that can be learned.

        Face it, if financial stability is your goal, you really have no other option. Believe me, I’ve looked, and investing is as good as it gets. You can take control of your finances. With as little as $50 a month in investing you can accumulate almost a half million dollars within thirty years. So start now. It’s never too late, but the sooner, the better.

        So what are you waiting for. This is your life we’re talking about. Take control of your financial destiny and go for it.