Hey ladies, I had the opportunity to interview my financial advisor about investing basics. In this interview James Mantione provides the Frugal Feminista community with some straightforward advice on money, the role of a financial advisor, establishing priorities, and what it takes to invest.
1. Do I have to make a lot of money to begin investing?
Many people feel that they don’t make enough money or have enough money to begin investing but that is a misconception. You can start with as little as a few hundred dollars and can make systematic additions/contributions with as little as $50 per month.
2. I am confused. I always hear that I need to invest. But invest in what? What kind of accounts and investments should I be thinking about? What really is out there in terms of investing?
Deciding on what to invest in can be a very time consuming and confusing decision to make, especially for the novice investor. This is why it is of the utmost importance to find an Investment Professional that you can trust and will do what is best for you within your risk tolerance and time frame to invest for.
3. What can a Financial Advisor do for me? What does a good Financial Advisor look like? What should I be careful about?
When meeting with an Investment Advisor make sure he/she is not recommending something to you without doing a full profile worksheet and questionnaire. This is done by asking you questions to determine what type of asset allocation would be suitable for you after taking into account things such as age, income and time frame to invest as well as liquidity needs for emergencies. Then you need to understand what the risk is of the investment being recommended to you, not just the upside but also the downside. Only after this process should a recommendation be made and you should be comfortable with a strong understanding of what you are about to enter into.
4. Black women have been historically good savers and historically conservative. Why is that a double-edged sword?
Black women can tend to be on the conservative side when putting money into savings vehicles which can be a double-edged sword by limiting the growth and eventually the return can be eroded by inflation (the cost of goods) over time. There’s nothing wrong with being conservative but a certain percentage of your assets should have a little more growth potential.
5. I have a lot of student debt. Should I wait before I pay it all off to begin investing?
Student loan debt can be a tremendous burden to most people and can be as big as a mortgage in some cases. This debt can put a gigantic strain on you from paycheck to paycheck and is a major issue in this country. There are ways though to extend the time to begin payment and even ways to restructure the payment plan in general. If you have some discretionary income after paying your overhead (debts and living expenses) then you should try to save at least 5-10% of each paycheck at a minimum. This can be figured out by doing a personal balance sheet. Add up all monthly income (after tax pay) then subtract all monthly expenses from it. You will come to your disposable income amount and hopefully there will be enough to start putting some away for your future and making your money work for itself.
6. What budgeting basics should a woman have in place to make putting aside investment money for the long term?
Individuals who are serious about building a good quality of life sometimes need to make sacrifices and not make decisions based on emotions or wants. Buying a $200 pair of shoes or a $400 pocket book might look great and impress your peers but usually does not help your overall quality of life especially if it takes away money that could go towards your plans and goals you want to achieve. If your peers judge you you on those material items then maybe it’s time to find some new friends. Success does not come without a cost. That cost usually entails discipline, sacrifice, education and taking some risks. Seeing your money invested is a wonderful feeling especially when knowing that you did the necessary things to make it happen, plus you also grow your self confidence and self worth as well as independence in the process.
Frugal Feministas: Leave a comment or question below. What do you think?