Why Latinos Should Be Investing… like Yesterday!

I wish you didn’t have to invest, because investing is risky. I wish we could pray over a couple of dollars and it multiplies 5,000 fold, but that isn’t going to happen.

There are two reasons why Latinos have to invest. One, annual inflation is about 2 percent. That means if you put a $100 bill in an old coffee can and didn’t see it again for one year, it would be worth less ($98) because of inflation. We invest to avoid the certainty of losing money to inflation.

Two, keeping that same $100 bill in a savings account would earn about 0.1% (10 cents) in one year, well below inflation. So what does that mean? It means you’re losing money again! Inflation at 2% minus 0.1% equals a 1.9% loss in purchasing power. Keeping money in the bank is a losing proposition.

So what are we to do? There are three things: put money to work in your own business, put money to work in real estate, or invest your money in stocks and bonds.

Since the majority of Latinos don’t own a business, scratch that one. Since most people can’t afford a 20% down payment on a home in the Bay Area, that one is gone. However, as Latinos participate more in the American Dream, they should invest in stocks and bonds to build their wealth, which helps to buy those homes or use those funds in our own businesses.

It is vital to our people that we invest now! Do you know why Latinos can’t afford college for their children or to retire in dignity? They don’t invest. Since the 1920s, the return of US stocks is roughly 10%. I know you can’t expect that sort of return every year, but you can expect your investments to grow over time. Therefore, we have to do what successful Americans do: invest.

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