How New Investors Can Overcome Challenges

The racial wealth gap is one of many systemic challenges that can prevent people of color from starting their investing journey. But there are many resources available to help you along your way and groups of people who have similar goals, including at Wealth Noir.

In this Motley Fool Live video recorded on July 23, Fool.com editor Desiree Jones interviews Wealth Noir founder Damien Peters about how investors, and particularly Millennials and people of color, can overcome the obstacles in the financial system and start investing for their future.

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Desiree Jones: At the Motley Fool, we are all about empowering all people to invest for long term. What’s should Millennials and people of color know about getting started with investing?

Damien Peters: Going back to something that you said is get started. It’s way easier now to start with small sums of money. Many companies offer fractional shares, you don’t have to buy a whole share if you can’t buy the whole thing. There’s online apps to make it very easy to invest and understand. You can take a small amount of money and get started if you don’t know what to invest in, invest in everything and buy ETFs, index funds again for the whole market. But you can also deal with staples that you know and love. People invest in Nike (NYSE: NKE) because they love Nike, people invest in Coca-Cola (NASDAQ: COKE) because they drink Coca-Cola. For the most part, if you invest and you continue with it and you have a long-term outlook, it’s relatively hard to truly lose your money or lose money investing in good companies for a long-term period. Automate your investments, you don’t want to have to think about it. Have your retirement investments come directly out of your paycheck, have the money that hits your bank account, have a portion go directly to your brokerage account or to your investment account or to your emergency fund, and then move from emergency funds to somewhere else. But there are many ways to get started. Stocks are a very, very easy way. A lot of people I’ll talk to, they really want to invest in real estate, want a rental property, but they need to save $30,000 to $40,000 or $10,000 to get in or they need to learn a lot. In the meantime, I tell them, “Invest in stocks, use a robo-advisor, buy index funds.” Put your money to work so that when you’re ready for the next move or your next investment, that it has been growing and working actively in the background. Especially now in the time of uncertainty, with a lot of things happening. Now is a good time, as anytime is. Now is always the best time to start investing or yesterday, I should say. As the old adage goes, “Time in the market almost always beats timing the market.” By investing early and staying and participating, that’s how you really unlock wealth as opposed to trying to find the hot swing trade.

Jones: Those are great tips. Then let’s also talk about the different types of challenges that those people may face when they are getting started. What do you think are some challenges and solutions when they encounter those challenges? How are they able to, I guess, combat those challenges when starting investing?

Peters: Yeah. One is getting past the fear of getting started. One the first challenges is like, I don’t know what to do, and everything seems so complicated, and again, I always say you’re better off downloading a random app – not a random app – but one of the trusted brokerages that are out there, and investing something because once you start, you’ve started, and delaying that is only going to hurt you. If you started doing nothing for a year and it’s still better off than having started a year later. There’s a lot of complexity oftentimes that can come with investing. Should I open my own account, should I do a 401(k), what should I do? Oftentimes, the easiest way to get started too is if you’re not already doing it, start with your 401(k) from employer. One of the best investments you can ever make is your employer match if your employer offers it because it’s guaranteed 50% to 100% returns on your money. You put into $100, they put in $50. People will be concerned it’s going into retirement account, can I use it, can I touch it, things along those lines. One is you should be saving for your retirement, you should allow the money to grow long term. There are several tax benefits about doing an account like this. Then lastly, two, if you are blessed to be in a problem where you have I think $10 or $12 billion in the IRA, like Petersfield, there are ways that you will be able to access and use that money to either purchase a house for addressing other assets. There’s a few different ways to do that. Then sometimes, some of the other challenges is your friends and family. I don’t know this, I lost money in the stocks, I’m afraid, and the truth is you can’t let the fear of other people truly dictate what you do. Sometimes you’re watching the news, you hear there’s a crash coming, everything is bad, which you’ll hesitate, it will stop you from going to the market, but the truth is consistently buying into the market, consistently investing has been time-tested and proven over hundreds of years to build capital and return for people. Those are some of the challenges that they might come across in ways to really take a punch and get started when it comes to building wealth.

The Motley Fool owns shares of and recommends Nike. The Motley Fool has a disclosure policy.

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