Girl, Make Your Money Grow!

Description

If you’re tired of living paycheck to paycheck and are looking for ways to create new wealth, then come on, girl—it’s time to make your money grow! In this timely follow-up to the bestselling Girl, Get Your Money Straight!, author and financial expert Glinda Bridgforth teams up with investment expert and stockbroker Gail Perry-Mason to deliver power-packed, sister-to-sister advice on how to master the stock market, grow your income, and start investing in your biggest asset—you. Girl, Make Your Money Grow! presents their step-by-step plan to help you clear away debt, create new streams of income, buy prime real estate, map out a personalized plan for retirement, and build an investment portfolio that’s right for you using bonds, mutual funds, and blue-chip stocks to lower your risk without sacrificing profits. Filled with Bridgforth and Perry-Mason’s warmhearted wisdom, and complete with exercises, affirmations, and inspiring stories of African American women who’ve successfully grown their financial gardens, Girl, Make Your Money Grow! is a fresh, fun, and eminently practical guide to achieving the next level of financial security and funding the future of your dreams.High Praise for Girl, Get Your Money Straight!

“Thoughtful, holistic, heartfelt advice.”—USA Today

“Girl, Get Your Money Straight! speaks to the heart and soul of sisters everywhere, and gives us the practical tools we need to not only conquer our money fears, but to lift our spirits and achieve our wildest dreams!”—Cheryl D. Broussard, author of Sister CEO and The Black Woman’s Guide To Financial Independence

“Girl, Get Your Money Straight! is a must-have guide for any woman who wants to have power over her money. Glinda Bridgforth cares deeply about her readers, and her warmth, energy, and financial savvy radiate from every page. ” —David Bach, bestselling author of Smart Women Finish Rich, and The Automatic Millionaire

“The Bible says that a fool and their money will easily part. For years, Glinda Bridgforth has been teaching us to be fools no more. This book is a must for every wise woman and her household.”—Dr. Bertice Berry, author of Redemption Song and I’m on My Way but Your Foot Is on My Head

“Glinda Bridgforth has written a great book that is insightful, heartfelt, humorous and easy to understand. Sisters will find it usable and practical in ways rarely found in money management books. I highly recommend that black women read this book cover to cover.”—George C. Fraser, author of Success Runs in Our Race and Race for Success

“A motivating guide to claiming financial health and success [that] speaks to the unique money challenges of Black women and offers empowering steps to healing.”—Ebony The author of Girl, Get Your Money Straight!, Glinda Bridgforth is the founder of Bridgforth Financial Management Group, a financial management company that emphasizes holistic counseling, and a regular contributor to Essence. Gail Perry-Mason is First Vice President of Financial Services at Oppenheimer & Co., Inc., an investment firm. Both speak to thousands of African American women each year about the importance of good money management and investing in their futures. They live in Detroit.Chapter One

Sisters Can’t Afford

Not to Invest

During the first week of March 2003, there was a buzz in the neighborhoods about a Newsweek cover story on soaring rates of achievement among African American women. Faster than the speed of light, it seemed, sisters were phoning and e-mailing one another, saying, in effect, “Girl, you’ve got to see this!” And see was the operative word, because much of the excitement had to do with the three beautiful sisters in the cover photo, a stellar lineup that implied so much about who we have become.

Next to the familiar faces of singer/actress Beyonce Knowles and The View cohost and attorney Star Jones was that of the less-well-known but equally confident Mellody Hobson, described simply in the caption as “money manager.” But consider how a few words can say so much about one woman and four million of us, too.

Some of us saw Hobson’s inclusion in the photo as a reminder that after crossing so many barriers, finally–and this explains the collective exhale–here was a sister who wouldn’t wince when someone demanded, “Show me the money.” Because Hobson, the president of Ariel Capital Management, Inc., a Chicago-based investment firm managing more than $12 billion in equities, knows just where the money is, thank you.

And she isn’t alone. Thousands of us are gaining a foothold in the world of high finance. “There are definitely encouraging signs of interest among African American women who are already investing and those who want to get started,” says Hobson. A regular on-air contributor to ABC’s Good Morning America, she holds a bachelor of arts degree from Princeton University’s Woodrow Wilson School of International Relations and Public Policy. “When I speak at seminars, the audiences are overwhelmingly made up of African American women,” says Hobson. “We seem determined to play catch-up so we can learn how to invest.”

Not surprisingly, many of the women Hobson meets also voice their concerns about dismal economic news and a plunging financial market. But Hobson has found that as these women educate themselves in how to invest and safeguard their profits, they both lose their fears and gain wealth. She adds, “As black women, we are the centerpiece of our community, so our interest in this Weld is a sign of growth and change to come.”

The Reverend Jesse Jackson views this growing financial interest among African Americans as one aspect of a historic continuum that began with emancipation, progressed through struggles to end legal segregation and attain voting rights, and can only culminate in financial empowerment. Reverend Jackson’s Rainbow/PUSH Coalition founded the Wall Street Project in 1997 to close the gap between the financial world and minorities. The organization is creating a movement that involves one thousand churches in economic empowerment workshops, offering financial education through credit and mortgage seminars, and establishing church investment and building funds.

This is all good from a social and historical context, but we want to narrow the lens and focus on you. You’re already taking the first step–reading this book in an effort to learn more about investing. What we can do–as Sister Tina Turner promises in her signature song, “Proud Mary”–is take it nice and easy. So let’s begin by addressing the concerns most often expressed by people thinking about investing for the first time. For instance, you probably want to know why you should put your hard-earned money into something you may know little about–and that can seem fairly volatile, given the ups and downs of any economy–rather than a nice, safe savings account.

That’s the question Diane, an algebra teacher at a tough St. Louis high school, kept hearing from her son, Jason. Whether walking down the noisy hallways or standing in front of her class explaining complicated formulas, Diane always carried herself with poise and grace. Her hair, pulled back in the familiar “schoolteacher” bun, was not only easy to care for, it had saved her thousands of dollars in costly salon visits. But just like her idol, Maya Angelou, Diane was fun-loving, hip, and cool. One year she was even coaxed by students to do the hustle as she chaperoned the senior prom!

So when Jason asked the question why people should put their hard-earned money into volatile investments instead of safe savings accounts, Diane couldn’t resist making something of a game out of it. Always a proponent of the showing-is-better-than-telling approach, she responded to his question with a proposition. “I challenged him to a contest. We each started with $2,000 and were free to make our money grow in whatever manner we thought best.” Diane invested her money in stocks and mutual funds. Her son put his into a savings account, but when his car broke down he pulled money out for repairs. When his buddy had an emergency, he gave him a loan. When the money was repaid, Jason nickel-and-dimed it away. Over a period of time, he withdrew the $2,000 and spent it all.

Five years later, Diane showed her investment statement to her son. “He had none of that money left, of course, but my two thousand had grown to $10,000. Once he saw that, I never had to nag him about investing again.”

Diane had taught her son something fundamental: If you work hard for your money, you deserve to see it grow–not go! Her profits have since allowed her to retire from teaching and pursue her dream of working with at-risk girls. “I teach them to stop waiting for Prince Charming to come along,” she says. “That’s a fairy tale. And in real life, if you want financial security, you can’t just depend on a job. You have to put a little aside at a time, and look to long-term investments.” For that reason alone, we always explain to our clients that the difference between financial survival and financial security is investing. The difference between job security and financial security is investing. The difference between financial security and financial freedom is investing. Over time, investing allows you to stop working for your rent or mortgage, stop working for your car payments, and stop working for your utility bills, so you can start working for yourself. In addition to your weekly salary, your stocks or bonds or mutual funds are working to help you pay that rent, those car payments, and those utility bills. And in the best-case scenario, your investments earn more than your wages, which means that when you are on the job, you’re there because you want to be, not because you have to be.

As with Anything in Life, There Are Risks

All of that could just seem like empty promises, of course, if you opt to invest and then lose your shirt. Sharon, a marketing director for a car manufacturer, dreams of using her stock profits to eventually take an early retirement and work as a consultant, thus avoiding corporate politics. If there’s one thing Sharon knows, it’s the politically correct image she needs to maintain whether in the boardroom or on the golf course with company clients. You’ll always see her well-dressed in meetings–tailored navy blue pin-striped suit with a crisp white cotton shirt, matching pearl earrings and necklace, and, of course, a freshly coiffed “do” with every hair strand in place. Financially, Sharon has taken care of business–she owns her home, drives a moderately priced car, and maximizes her 401(k) account. But she feared she was about to be wiped out when, shortly after the terrorist attacks on the World Trade Center, she opened her financial statement and learned that she’d lost a whopping $25,000 in stock market investments. “I was in shock,” she says. Fortunately, Sharon, who is one of Gail’s clients, had a variety of domestic and international stocks and bond funds. That way she had some control over the financial roller coaster–when certain stocks faltered or fluctuated with the cycles of the market, others kept her afloat.

Stories of sudden loss, such as Sharon’s, can reinforce our fears about investing. That was one problem Ernestine Bowers of Nashville, Tennessee, a single mother and the director of a senior citizens program, encountered when she started an investment club for black women in 1989. “Relatives as well as friends made excuses about why they didn’t want to join and start investing.” She kept searching until she found other women who were willing to venture into this “unknown world of finances.” Fourteen years later, the friends and relatives who declined are likely wishing that they’d decided differently. Bowers’s group was cited in 2001 as the top-rated all-female investors’ club in the country. From 1992 to 2002, the rate of returns on their investments was 20.3 percent per year. “We continue to have a positive rate of return, at a time when so many others are losing money,” Bowers relates. And she and her fellow members are continuing to invest even during a downturn in the economy, which was something they had agreed on when they started.

“That was a key decision,” Bowers says. “People have to understand that the market is the best long-term place to put money. You can’t be too concerned about ups and downs. When we first got involved, the market was way down. It moves in cycles. And what goes down will come back up again.”

We both know from our own experiences that longevity is one of the most crucial issues in investing. In fact, according to Mellody Hobson, the best way to make your money grow is to adopt a “long-term view of investing. You watch your money and you move it when necessary, but don’t be overly concerned about a week’s or a month’s performance. Investing is not for the short term, so don’t go into it thinking that you’ll just take your money out after two years.”

Waiting It Out

Bowers and Hobson are alluding to a cornerstone of investment theory. History has proved that long-term investments in stocks will, over time, result in the kind of profits we all hope to achieve. But it is important to remain aware of current economic conditions and how they affect certain industries. A few years ago, Glinda invested a few hundred dollars in a technology fund, with the intention of contributing additional money automatically each month. As technology and Internet stocks began to dive and the dot.com gold rush seemed more like a disaster in the making, her investment slowly diminished. Although Glinda considered pulling out, like many investors she believed the downward slide would soon end–it seemed impossible that the dot.com boom could shrivel up completely. But between the annual fees and the loss in net asset value–that is, the total value assigned to the stocks in the fund–the account was slowly being eaten up. It eventually hit zero and closed. Fortunately, the company had never set up the automatic transfer for additional contributions, as Glinda had requested, or she would have lost more.

The truth is, uncertainty and loss are as much a part of investing as gain, even for those with experience in the financial world. However, since World War II, markets have historically rebounded from shocks and dips. So we believe, as do the many other investment specialists interviewed for this work, that it is a mistake to steer clear of investments because of market volatility. We encourage our clients to cautiously ride out any market gyrations, because there really is no better way to make your money grow over a long period of time. Just take a look at the table on the next page, from the November 10, 1997, issue of Newsweek, to see the odds of making money over the long haul.

“Annualized” means that the total return was divided by the number of years held to convert it to a simple annual return figure. The actual yearly return probably varied–that is, it was not the same every year. This chart is from Standard & Poor’s (S&P’s) 500-stock average, annualized monthly returns.

Odds of annualized return per year

Number Odds of Odds of Odds of Odds of

of years taking gaining gaining gaining

held a loss 0 to 10% 10 to 20% 20+%

1 year 26% 18% 20% 37%

3 years 14% 28% 39% 19%

5 years 10% 31% 49% 10%

10 years 4% 42% 53% 1%

20 years 0% 37% 63% 0%

This table shows your chances of gain or loss over different periods of time for an investment in one of the S&P 500 stocks. The S&P 500 is the broadest measure of corporate America’s stocks, as it measures how 500 American companies are doing in the market. Looking at the bottom row, you see that if you hold your investment for 20 years, you have a 63 percent chance of achieving a 10-20 percent annualized return, either through collecting dividends, which are bonuses paid from a stock’s profit, or by selling the stock and taking a profit. The same 20-year investment has a 0 percent (yes, that’s zero) chance of taking a loss. Those are pretty good odds!

As Gail likes to put it, “When it comes to investing, the principle of compounding is a girl’s best friend. This means you are making more money on top of the money you have already made over and over again. The principle of compounding is like an employee that you could never fire because they work 24 hours a day, 365 days a year, without a vacation. Once you work for your money, this principle works for you, but only if you don’t disturb it by taking your money out. Just look at your statements, but don’t touch. How many years would it take to double your money? Good question. This brings us to the Rule of 72: If your rate of return is 8 percent per year, then you divide 8 into 72, which equals 9. So in nine years your investment of $1,000 would be worth $2,000, but only if you put the Do Not Disturb sign on it.”

Due to the principle of compounding, when you consider long-term investments, the rate of growth can be astounding. While we don’t assume that you’re someone who can afford to invest in the stock market for the generations that come after you, it is fascinating to consider really long-term implications. One of Gail’s friends is from a family that was given a gift of $250 in Phillip Morris stock in the early 1900s. This stock has been passed down through several generations now, and the current owner, Gail’s friend, retired in his early fifties on the dividends from it. Almost one hundred years later, he receives $9,000 in dividends four times a year from the original $250 investment. If you think about it, you will realize that his family must have held on to this stock, refusing to sell it, through thick and thin. They held on to it through the Great Depression of the 1930s, for example, when the stock market fell so flat for so long that they must have thought it would never recover.US

Additional information

Weight	7.8704 oz
Dimensions	0.6200 × 5.4800 × 8.2100 in
Imprint	Crown Currency
Format	General Trade
ISBN-13	09780767914260
ISBN-10	0767914260
Author	Glinda Bridgforth, Gail Perry-Mason
Audience	General / adult
BISAC	BUS109000, BUS050020
Subjects	financial books for young adults, money, financial planning, self help books for women, business books, entrepreneur gifts, finance books, financial books, investing books for beginners, strategy, finance books for young adults, girl boss gifts, business books for women, office gifts for women, leadership books for women, boss gifts for women, boss lady gifts, feminism, motivational books, personal finance, economy, self help books, BUS109000, BUS050020, investing, finance, debt, economics, wealth, motivation, leadership, self help, business