April 18, 2012 10:17 AM •

Choose Wealth, Not Style

by Earl "Butch" Graves Jr. Posted: April 17, 2012

Earl "Butch" Graves Jr., President & CEO, Black Enterprise

It’s time we had a heart-to-heart talk about our financial future. I’m sure if you’ve read my column, heard my speeches, or had the chance to talk with me one-on-one, you know I have loudly and consistently beat the drum for sound money management and disciplined, long-term investing. I believe they represent the best means for individual and collective advancement for African Americans, bar none.

Bluntly stated, we are driving in reverse. The yawning wealth gap between African Americans and our white counterparts has grown to its widest level in more than 25 years. Today, white households, on average, have a net worth 20 times that of African Americans; in 1984, that ratio was 12 to 1. What does that mean in dollars? The typical black household has roughly $5,700 in wealth compared with about $113,000 for the typical white household. Moreover, more than a third of our households have zero or negative net worth versus about 15% for whites.

It’s time to shift gears. I truly believe young people hold the best chance for getting on the road to building significant wealth and, in turn, sustaining this process to pass it on to future generations. It’s sad to say that many of my contemporaries have engaged in freewheeling spending, made a meager attempt at investing, and failed to protect their assets—placing them and their families in a financial h*** that will take years, if not decades, to climb out. You, however, can avoid similar pitfalls.

First, realize the difference between wealth and income. It may sound rudimentary, but many of us confuse the definition of net worth—what you own (assets such as your home, savings and checking accounts, and stocks and mutual funds) minus what you owe (liabilities such as your mortgage, auto loans, and credit card debt)—with wages and  earnings. Depending on how finances are managed, many professionals with six-figure incomes can—and do—have a negative net worth.

Second, change your behavior. Despite a financial crisis, a recession, and a weak recovery over the past few years, some still have yet to learn the harsh lessons that come with conspicuous consumption. In fact, a friend of my son tried to convince me that waiting several hours to buy a pair of $180 Air Jordan XI Concords—you know, the sneaker frenzy that resulted in violence and arrests—was actually a good investment. He told me how reselling “the kicks” would eventually produce a tidy profit of $50. I quickly shared with him the value of an investment with a much greater long-term return for his 200 bucks: 10 shares of GE stock with reinvested dividends.

Ostentatious living is not the path to building lasting wealth. Last time I checked you can’t use a diamond medallion for a down payment on a home. I have yet to find any institution of higher learning that accepts a pair of retro Air Jordans for tuition. And just try to deposit a set of $5,000 rims as investment capital. Bottom line: Trying to design a future through voracious consumerism or absentee investing is sheer madness.

Instead of purchasing such quickly depreciating assets, learn this four-letter word: Save. Through focused, long-term investing you’ll benefit from the power of compounding and as a result, your money will grow exponentially. But you must stick with it. Those who pull their money in and out of the stock market due to volatility tend to produce real capital losses while others who sit on the sidelines realize zero capital gains. Just look at the activity of the Dow Jones industrial average over the past few years: On March 6, 2009, the index fell to 6, 547, at the time a 12-year low; exactly three years later, the index closed around 13,000, a four-year high. To further make the case for intelligent investing, on that same day in 2009, you could have purchased a single share of Apple stock at $86; three years later that same share of Apple was trading at $542—a 530% return.

My message is clear: Delay immediate gratification so that you can maximize your future. Use your greatest competitive advantage to gain wealth: time.


Views: 94

Reply to This

Replies to This Discussion

This is a great article and I hope someof you take heed... take half the money you get from these men and invest it. Had i invessted half the money I received from men in my 20's I could afford to be doing my own thing. By making some investments over the past few years I just yesterday took a several thousand $ withdrawal to help me do some things i have been wanting to do...reinvesting my investment in myself. If i could go back and teach my younger self something...it would be in 2 years you will not be rocking that dress, purse, shoes. Remix that other outfit and invest and you can have some f*** you money when these ninjas are on your nerves.

Reply to Discussion


Ballerific Events


Future's Tour Rider Reveals He Makes 145K For 45-Minute Show

Started by Asimplebijou in Talk Ish 6 hours ago. 0 Replies

TMZ has obtained #Future's rider from a show back in December and, well, it seems pretty standard, except maybe for the part where his donuts need to look a certain way.According to TMZ, the rapper…Continue

By @balleralert via @RepostWhiz app: Chris Brown To Donate $1 From Every Sale Of 'Royalty' To Children's Charity

Started by Asimplebijou in Talk Ish 6 hours ago. 0 Replies

#ChrisBrown has pledged to donate a $1 from every sale of his upcoming album #Royalty, named after his daughter, to a childr en's charity.The 26-year-old singer announced the news in a video posted…Continue

Adele's 25 Makes History, Sells 3.38 Million Copies In First Week

Started by Asimplebijou in Talk Ish 9 hours ago. 0 Replies

The first week numbers are in for #Adele's 25 and, according to Nielsen Music, the British singer's third album has sold an astonishing 3.38 million copies in the U.S. alone, making it the…Continue

Yusaf Mack Opens Up about His Sexuality

Started by Asimplebijou in Talk Ish 22 hours ago. 0 Replies

#YusafMack, a Philadelphia boxer, was put on blast a few months back for possibly being gay. But now Mack has confirmed that he is gay and is specifically interested in #transsexual women. "I love…Continue

Latest Activity

Asimplebijou posted blog posts
22 minutes ago
Asimplebijou's 2 blog posts were featured
22 minutes ago
Terrell Jones liked Eleven8's blog post Kobe Bryant Announces Plan To Retire, "I'm Ready To Let You Go"
1 hour ago
Terrell Jones commented on Eleven8's blog post Kobe Bryant Announces Plan To Retire, "I'm Ready To Let You Go"
"I can't even hate on Kobe he deserves all the accolades he gets, people forget how many…"
1 hour ago
Terrell Jones commented on RubyWoo's blog post Tim Tebow & Girlfriend Break Up Over His Vow of Abstinence - blogged by @LoveRubyWoo
"@ Marie could you please take off your caps lock?"
1 hour ago
Eleven8's blog post was featured
2 hours ago
Eleven8 posted a blog post
2 hours ago
marie alice romain commented on RubyWoo's blog post Tim Tebow & Girlfriend Break Up Over His Vow of Abstinence - blogged by @LoveRubyWoo
2 hours ago
Peachkyss posted blog posts
2 hours ago
Peachkyss's 2 blog posts were featured
2 hours ago
That Fly Philly Diva liked Tiffani "Pencil Skirt Mama"'s blog post Slay Your Pay: How You Can Increase Your Pay by 50% -- Blogged by @tiffanicrenshaw
2 hours ago
That Fly Philly Diva liked Peachkyss's blog post Ballerific Foot Werk: Christian Louboutin Otoka Suede Bootie
2 hours ago

© 2015   Created by Baller Alert.   Powered by

Badges  |  Report an Issue  |  Terms of Service