7820: Staying In The Black.

From The Chicago Sun-Times…

Blacks can get savings back on track

By Francine Knowles

African Americans who’ve had to cut back their savings and investments because of the recession can get back on track. That message for blacks and others in a similar predicament comes from Ariel Investments President Mellody Hobson.

“It’s certainly possible to recover from this setback,” she said. “We need to be very deliberate and very disciplined about saving” going forward.

A survey released by Ariel last week found that middle-class blacks are more likely than middle-class whites to have reduced their saving and investing in the last two years. Among middle-class individuals with household incomes of at least $50,000 who responded to the survey, nearly half of all blacks and 31 percent of whites dipped into savings to make ends meet.

Twenty-seven percent of blacks who participate in 401(k) plans reduced the amount they contributed per month, compared with 16 percent of whites, the survey found.

Blacks “have been disproportionately affected by the recession,” Hobson said. “You can see that in the jobs numbers. The unemployment numbers for African Americans are approximately twice as high as for white Americans.”

The survey also found that 60 percent of blacks, compared with 37 percent of whites, have been asked for financial help by friends or family; 15 percent of blacks compared with 7 percent of whites asked family or friends for help.

“It sets us back in terms of retirement security, which is so important,” she said of the curtailment in savings. “Not only have people had their accounts experience a downdraft, but then to have a downdraft and to have liquidated some of those assets makes it even more challenging.”

But she said she believes that at some point the economy will fully recover.

“Jobs will come back,” she said. “When that does happen, be ready and willing to save.”

Start by squirreling away money in an emergency fund, she advised.

“Secondly, make sure to take advantage of the retirement plans that are offered inside of your company,” she said. “At minimum, contribute enough to get the company match, which is free money.”

And don’t shy away from stocks, she stressed.

“Despite the market volatility that we’re seeing, understand that the most money is made in difficult markets,” she said. “As Warren Buffet says, you want to buy at the point of maximum pessimism and sell at the point of maximum optimism. Because of the pessimism and fear that prevail today, stocks are cheap, and it’s a great opportunity to create wealth over the long-term.”