Dr. Boyce Watkins on Why African Americans Avoid Stock Market
- Thread starter mortuus est
- Start date
A lot of old school cats don't even trust banks like that. My old man and my girls dad walk around with racks on em and have cash stashed in different spots. No bank cards or anything like that
Me personally, my retirement fund and IRA is all the money I'm going to invest. Trusting some cac in a suit to play with anymore of my money isn't about to happen
Me personally, my retirement fund and IRA is all the money I'm going to invest. Trusting some cac in a suit to play with anymore of my money isn't about to happen
mortuus est
Veteran
i feel the same tbh, loads of people get jacked too, back in september 400 was taken out my brothers account by a car insurance company lol the bank returned it but he only noticed cause it was a big chunk, imagine if it was smaller
saw this just last night to support the thread theme..
Should You Hold High-Yield Bond Funds Now?
May 26th, 2015
High-yield bond funds and dividend stocks have supported the income needs of investors for several years as government bonds have paid almost nothing. But what happens to high-yield portfolio values in the next crisis?
Is the credit risk of high-yield bond funds worth the extra yield you’re getting now?
I recently met with a retired couple who had a portfolio that consisted of high-yield bond funds and dividend stocks. In the past, they had made money in real estate and decided to simplify their lives a few years ago and moved their profits into mutual funds.
After speaking with them and gauging their risk tolerance, it was clear that they were conservative investors and could not tolerate a short-term decline in account value of more than 10%.
They were surprised when I showed them what happened to these same funds during the last major market correction, before they had invested in them.
Are You Prepared to Hold Through a 30% Decline in Value?
Investors in recent years have understandably been challenged to find decent yields in a near-zero interest rate environment. But high yields can come at a high cost in the form of steep price declines in major market corrections.
Although the retired couple in my example had decent funds for generating income now, they had no idea of the market risk. For example, I showed them the performance history of their mutual funds and they were shocked that each of them, including the high-yield bond funds, had declined in value by at least 30% in the midst of the 2008 financial crisis.
In 2008, the average high-yield bond fund had a negative 26% return, whereas the Barclays Aggregate Bond Index had a gain of 5%. That’s a 31% differential!
Their stock funds fell in price by much more than 30%. Therefore the mutual funds, which were recommended by a local banker, may have been suitable for their investment objective, they were not suitable for their risk tolerance.
How Can You Get High Yields Without High Risk?
Put simply, if you don’t think you can hold on to your high-yield bond funds during a steep price decline, they may not be suitable for you because you can do significant harm to your portfolio if you sell at a low point.
Over the long term, high-yield bond funds have higher average yields and higher average total returns than bond funds that invest in higher credit quality corporate bonds and government bonds.
Therefore, you can get the high yields you want over time but you must be willing to hold on during the tough times.
If you are a conservative investor, you might try a more diversified approach. For example, if you need income, you might try investing in stocks or stock mutual funds with high yields but balance the market risk with bond funds with higher average credit quality, such as an index fund like Vanguard Total Bond Market Index (VBMFX), which now has a 30-day yield of 2.88% but it doesn’t have risk of price declines like high-yield bond funds.
An ETF that pays a bit more in yield without the extreme credit risk is iShares iBoxx $ Investment Grade Bond (NYSEArca: LQD).
The bottom line is that if you need income that is higher than the average rate of inflation, which is around 3%, you need to be willing to take on extra market risk. And the higher above 3% you need, the more market risk you’ll need to take, especially with regard to bond funds.
http://etfdailynews.com/2015/05/26/should-you-hold-high-yield-bond-funds-now/
_________________________
been studying these recently ....
High Dividend Stocks By Yield
http://www.dividend.com/dividend-stocks/high-dividend-yield-stocks/
Should You Hold High-Yield Bond Funds Now?
May 26th, 2015
High-yield bond funds and dividend stocks have supported the income needs of investors for several years as government bonds have paid almost nothing. But what happens to high-yield portfolio values in the next crisis?
Is the credit risk of high-yield bond funds worth the extra yield you’re getting now?
I recently met with a retired couple who had a portfolio that consisted of high-yield bond funds and dividend stocks. In the past, they had made money in real estate and decided to simplify their lives a few years ago and moved their profits into mutual funds.
After speaking with them and gauging their risk tolerance, it was clear that they were conservative investors and could not tolerate a short-term decline in account value of more than 10%.
They were surprised when I showed them what happened to these same funds during the last major market correction, before they had invested in them.
Are You Prepared to Hold Through a 30% Decline in Value?
Investors in recent years have understandably been challenged to find decent yields in a near-zero interest rate environment. But high yields can come at a high cost in the form of steep price declines in major market corrections.
Although the retired couple in my example had decent funds for generating income now, they had no idea of the market risk. For example, I showed them the performance history of their mutual funds and they were shocked that each of them, including the high-yield bond funds, had declined in value by at least 30% in the midst of the 2008 financial crisis.
In 2008, the average high-yield bond fund had a negative 26% return, whereas the Barclays Aggregate Bond Index had a gain of 5%. That’s a 31% differential!
Their stock funds fell in price by much more than 30%. Therefore the mutual funds, which were recommended by a local banker, may have been suitable for their investment objective, they were not suitable for their risk tolerance.
How Can You Get High Yields Without High Risk?
Put simply, if you don’t think you can hold on to your high-yield bond funds during a steep price decline, they may not be suitable for you because you can do significant harm to your portfolio if you sell at a low point.
Over the long term, high-yield bond funds have higher average yields and higher average total returns than bond funds that invest in higher credit quality corporate bonds and government bonds.
Therefore, you can get the high yields you want over time but you must be willing to hold on during the tough times.
If you are a conservative investor, you might try a more diversified approach. For example, if you need income, you might try investing in stocks or stock mutual funds with high yields but balance the market risk with bond funds with higher average credit quality, such as an index fund like Vanguard Total Bond Market Index (VBMFX), which now has a 30-day yield of 2.88% but it doesn’t have risk of price declines like high-yield bond funds.
An ETF that pays a bit more in yield without the extreme credit risk is iShares iBoxx $ Investment Grade Bond (NYSEArca: LQD).
The bottom line is that if you need income that is higher than the average rate of inflation, which is around 3%, you need to be willing to take on extra market risk. And the higher above 3% you need, the more market risk you’ll need to take, especially with regard to bond funds.
http://etfdailynews.com/2015/05/26/should-you-hold-high-yield-bond-funds-now/
_________________________
been studying these recently ....
High Dividend Stocks By Yield
http://www.dividend.com/dividend-stocks/high-dividend-yield-stocks/
So slavery is why black people don't get into the stock market?
That's why people just say get over it. How you gon' let that effect you in this day and age??
I would also have to do some research on the #s of black owned businesses. I see plenty of black ppl with businesses.
I agree with his Harlem mentality. Own something that you can pass on to your kids
@ Dr. Boyce wearing his dress shirt straight from the package.Vlad trying to push his no homeownership agenda
"Don't let your home be the majority of your wealth" is a good nugget to walk away with
him saying slavery just isn't right, he should've brought up Black Wall Street, because that was after slavery
feelosofer
#ninergang
Black Wall Street was an amazing phenomenon but the problem is that as a whole most Blacks have not been taught the finer points of money management. I feel like successful Black investment bankers should hold seminars on how to manage 401ks, Roth IRAs and IRAs and basic investment practices. Each one teach some. We have to learn not follow our parents archaic ideas about money and slowly move into the next level.
i feel what vlad was saying about home ownership to a certain extent but he went a little overboard. and it's funny how he talks about the mortgage payment and says you could be putting that money in the stock market but barely mentions the rent expense that would eat most of that.
i hate when people make good points but overplay their argument cause it muddies the path to the truth.
i hate when people make good points but overplay their argument cause it muddies the path to the truth.
LadySimone
Banned
I think it boils down to education. I would like to invest in the stock market but I wouldn't know where to begin. I need to speak to my uncle.
feelosofer
#ninergang
Most people don't I learned every thing through trial and error. But also our self image plays a part as well, we these as things white folks have not knowing that even if you make modest money, you squirrel away a little here and a little there.
LadySimone
Banned
I just saw some videos on YouTube so I have a better idea . The better sticks presumably will cost or I'm going up have up sit on a few for years
Mr.Big Meat McGee
All Star
Gshyt. Alot of Black people don't know / have good financial and economic skills.
Larry Lobster
/-_-\
Kooley_High
All Star
I really hope Boyce doesn't make these Vlad interviews a thing. He just being used by him
It's not complicated.
Most black people don't know very much about stocks (or finance in general) and thus don't have that knowledge to pass down to their kids. White people are more likely to have parents/family members in the finance history, or at least come from a household where their parents are more financially literate.
I've often considered getting into mutual funds/stocks/etc myself but I don't know where to start and am kind of averse to risk, so I just squirrel my money away in a savings account.
Most black people don't know very much about stocks (or finance in general) and thus don't have that knowledge to pass down to their kids. White people are more likely to have parents/family members in the finance history, or at least come from a household where their parents are more financially literate.
I've often considered getting into mutual funds/stocks/etc myself but I don't know where to start and am kind of averse to risk, so I just squirrel my money away in a savings account.