As a person of color, building wealth can feel like an uphill battle. Systemic racism, discrimination, and limited access to resources have historically made it more challenging to accumulate wealth. However, investing and stock market investing can be an excellent tool to help close that gap. In this post, we’ll discuss actionable steps you can take to build passive wealth through investing and stock market investing and encourage you to take the Signature Course, a five-week investing program to learn how to create a signature investing strategy.
Step 1: Educate yourself on investing
Investing can feel intimidating and complicated, but with the right education, you can gain the knowledge and confidence to make informed investment decisions. Start by reading books, blogs, and articles on investing and attending webinars and seminars to learn about investing strategies. There are many great resources available to help you learn the basics of investing and the different investment options available to you.
Step 2: Define your investment goals
Defining your investment goals is an essential step in building wealth through investing. What do you want to achieve through investing? Do you want to save for retirement, buy a house, or fund your child’s education? Defining your goals will help you make informed investment decisions and focus on your long-term objectives.
When defining your investment goals, it’s also important to consider your risk tolerance. How much risk are you willing to take to achieve your investment goals? Investing always involves some level of risk, but understanding your risk tolerance can help you make more informed investment decisions.
Step 3: Create a budget and save consistently
Investing requires money, and the best way to start is by creating a budget and saving consistently. Allocate a percentage of your income to investing each month, and stick to it. Even small amounts can add up over time, and consistent saving is key to building a strong investment portfolio.
When creating your budget, be sure to include any debt repayment goals you have as well. Paying off high-interest debt, such as credit card debt, should be a priority before investing, as the interest charges can quickly erode any investment returns you might earn.
Step 4: Diversify your portfolio
Investing in various assets, such as stocks, bonds, and real estate, can help reduce risk and increase potential returns. Diversification is key to building a robust investment portfolio.
When investing in the stock market, it’s important to diversify across different industries and sectors. Avoid investing too heavily in any one stock, as this can expose you to too much risk. Instead, consider investing in index funds or exchange-traded funds (ETFs), which provide exposure to a diversified basket of stocks.
Step 5: Invest in companies you believe in
When investing in the stock market, research companies and invest in those that align with your values and beliefs. Investing in companies that you believe in can also provide a sense of fulfillment and help you feel more connected to your investments.
Some people of color prefer to invest in companies that prioritize diversity and inclusion, and there are many great options available. By investing in these companies, you can not only potentially earn strong investment returns but also support businesses that are working to create positive change in the world.
Step 6: Be patient and consistent
Building wealth through investing takes time and patience. It’s essential to stay consistent and disciplined with your investment strategy.
Assuming a 30% annualized return, a $10,000 investment would be worth approximately $43,219 after five years. However, it’s important to note that this is just an estimate, and actual returns may vary based on market performance.
Overall, the longer you’re able to wait for your investment to work, the better for you!
Step 7: Seek advice from professionals
Consulting with a financial advisor or investment professional can provide valuable insight and guidance in building an investment strategy that works for you. However, I tend to find having a financial advisor a bit limiting because no one will understand your goals better than you, which is why I love being an educator. Learning how to invest will help you to surpass the norm. I can help you create a comprehensive financial plan that considers your investment goals, risk tolerance, and overall financial situation.
Many successful people of color have built their wealth through investing and the stock market. For example, Robert F. Smith, the founder and CEO of Vista Equity Partners, is one of the wealthiest black people in the world, with a net worth of over $6 billion. Smith has used his wealth to fund education initiatives and support historically black colleges and universities.
Another example is Daymond John, the founder of FUBU and a successful investor on the TV show Shark Tank. John has built his wealth through a combination of entrepreneurship and investing, and he is a strong advocate for financial education and empowerment for people of color.
I am also an example of how investing can help people of color accumulate wealth. I used the stock market to get out of debt, pay for my wedding, and co-own two hotels. As an angel investor, I have also invested in several startups and have seen strong returns on my investments.
It’s important to remember that investing can be scary, especially if you’re new to it. However, as someone who has faced my fears and taken the plunge, I can tell you that it’s worth it. Investing has allowed me to build a strong financial foundation and create a more secure future for myself and my family.
Investing and stock market investing can be an effective way to build passive wealth as a person of color. By educating yourself on investing, defining your investment goals, creating a budget, diversifying your portfolio, investing in companies you believe in, and seeking advice from professionals, you can start building a strong investment foundation.
Remember that building wealth through investing takes time, patience, and discipline. It’s essential to stay consistent and not let fear hold you back. Many successful people of color have built their wealth through investing, and you can do it too.
If you’re ready to take your investing to the next level, I highly recommend taking the Signature Course, a five-week investing program. The program is designed specifically for people of color and provides a comprehensive education on investing and the stock market. With the knowledge and tools you gain from the program, you can create a strategic and aligned plan.
It’s also important to remember that investments come with risks, and it’s crucial to understand these risks and consider them carefully before investing.