Magazine article Black Enterprise

Building Wealth Requires Do-It-Yourself Investing

Magazine article Black Enterprise

Building Wealth Requires Do-It-Yourself Investing

Article excerpt

[ILLUSTRATION OMITTED]

THIS YEAR, MY 6-YEAR-OLD DAUGHTER, Ella, learned how to count money. I burst with pride when I walk into Ella's room and discovered her, kneeling on the floor, itemizing the nickels, dimes, and quarters in her piggybank.

Beyond Ella's new counting skill, though, it'll be my job to teach her to appreciate the true value of a dollar. At some point, I'll need to break it to her (gently) that saving money--and maximizing those dollars via prudent investing--is the only way to guarantee a comfortable future.

Increasingly, we must all fend for ourselves when it comes to living comfortably in our golden years. In 2008 and 2009, people nearing retirement who treated their investment portfolios like toaster ovens they could "set and forget" got burned. Between early 2008 and March 2009, workers ages 55 to 64 lost roughly a quarter of their 401(k) savings, according to the Employee Benefit Research Institute. Some of those losses were preventable. Nearly a third of older 40 l(k) participants had 70% to 90% of their portfolios tied up in equities, which was inappropriately risk-ridden considering their proximity to retirement.

Building a nest egg takes active involvement. Just a few generations ago, this wasn't the case. Before the tax law that created the 401(k) went into effect in 1980, employers offered "defined-benefit" pensions that guaranteed workers a monthly benefit check, determined by salary and years of service, upon retirement. …

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