Recently I was approached by an AME Member with an Economic Development plan for the Church. It began by detailing the millions of dollars Black churches deposit each Monday. It ended with a very high risk investment plan for this money. I asked him, "Why don't you invest YOUR money and then just tithe the income to the church?" After considering it for a moment he replied that it was too risky for him to invest his retirement portfolio in the venture. Then why would you invest the church's money?, I asked. That's different he replied. This is not the first time something like this has happened. Why are the "Church Economic Development Evangelists" so willing to invest God's money in a place they won't put their own? Just Curious

-- Anonymous, September 25, 2003

Answers

You know Rev. Paris, that one left me speechless. I believe I would just have to walk away from the brother. Too real!

-- Anonymous, September 25, 2003

One of the reasons why black Americans have low net worth is our individual and collective aversion to risk. A central tenet in finane theory is the positive relation betwen risk and reward. As risk rises (beta coefficient) the attendant rewards increase also. As risk falls, rewards decline. Or as we know it better, nothing ventured, nothing gained. There is absolutely nothing wrong with investing provided the objective is for a LONG TERM strategy. We seek safe returns with big yields. I'm sorry to say but such investment products exist only in Peter Pan's Never-Never land or in the scheming minds of snake-oil salesmen. I have been actively involved in securities investment for a long, long time. I have seen short-term decreases in my wealth portfolio but this is not a signal for me to panic. If your objective is to enjoy specualtive profits there are investment instruments available which can meet this particular objective. If you desire something less risky just buy common stock and become a co-owner in the creation of capital. Many of our families members work hard all of their lives yet at the time of the reading of their final will and testament (assuming they have one) nothing or very little in the form of real wealth exists in their estate. When we don't bequeath wealth to posterity we are unable to enjoy the benefits of economic prosperity. This is well worth the risk. Hoping to win the lottery is OK but the odds are you will not be so lucky. I like the odds available in the NYSE or NASDAQ. QED

-- Anonymous, September 25, 2003

Bro. Bill raises some good points about the market. Two years ago, after watching my meager investments continue to dwindle, after a growth of 100% the previous two years, I sort of panic'd and bailed out...cutting my losses, so to speak.

Well, now, those same funds are now growing again. Maybe I should have waited out the storm.

BTW, Bill -- a question for you [phrased somewhat tongue in cheekly (is that a real adverb?)]

With banks paying a paltry 1 or 2 per cent on savings and mutual funds and with inflation around 3 or 4 per cent -- and even the small earnings the banks do pay is subject to taxes, we're losing money. Are we not better off to simply keep the money under the mattress?

-- Anonymous, September 26, 2003

To my frugal friend Larry Clark -

Use that mattress for sleeping purposes only ! :-) Once you transfer money to an "account" like a mattress or a cookie jar you forgoe all interest. An asset with a zero yield is pure liquidity not capital. Also, at least your savings will be insured through FDIC. QED

-- Anonymous, September 26, 2003

Bro. Bill was too kind to point out a couple of other factors:

• At 1%, your savings will double - in 72 years.
• At 2%, your savings will double in 36 years
• At 3% inflation, today's dollar will be worth .50 cents in 24 years
• at 6%, your bond portfolio(if it ever gets back there), would double in 12 years
• if you were able to achieve a seady 8% in blue chip stock appreciation, your portfolio would double in about 9 years.
• at 12% counpound growth, if it were sustainable, your riskier stock portfolio would double in 6 years.

The choice is how to balance your ability to toelrate risk between your long-term goals (capital appreciation to a specific target) and your short-term needs (junior going to FAMU to learn economics from Dr. Dickens. :)). n

-- Anonymous, October 04, 2003

Bill Dickens and his wife Jenny are part of our family. We love them dearly. My daughter licentiate Danielle graduated from American University and Bill has an advanced degree from American. So they have this bond and he is officially her uncle.

When my daughter was 8 she would get up early on saturday with paper and pencil to watch TV. I thought nothing of it, for I assumed she was drawing cartoon characters. She would get up at 7. one saturday I got up and decided to watch cartoons with her. I was shocked. She was watching a program on PBS. The stock reports and the weekly stocks in reviews. She was writing down notes. She loved watching it. I have no idea where she got the notion. I knew nothing about stocks and could only sit and listen. Well at 26 she has her mutual funds, her own business and loves economics. I still don't understand mutual funds but I have them.

My daughter has been able to pay off a student loan with one of her funds.

I have had financial planners come to my church to do workshops for my congregation on getting started with stocks, bonds and mutual funds. This falls under our Christian Education.

I am hoping that if people have questions about economics, savings, etc. that they will ask Bill.

And another foot note. In the fall of 2004 my daughter will be entering seminary and she is looking at a program in San Francisco that incorporates, Economics and Ethics in the curriculum.

-- Anonymous, October 04, 2003