Investment

More Black families arechoosing to invest in the stock market. But with news offinancial troubles brewing globally, some people may begin to worry about the security of their investments.

Experts say there's no reason to panic. The stock market goesthrough a natural course of ups and downs that balancesout in the long-run. During any downturn, investors should keep their eyeson the long-term rewards of their investments.

"The '90s were an unprecedented time for the stock market," says Mellody Hobson, senior vice president of Chicago-basedAriel Mutual Funds. "There are risks toinvesting. But people have to remember that stocks have outperformed all other investments since 1926 and averaged about 10percent a year in annual returns."

Financial expert Kelvin Boston says there's only onething that is certain about the stock market: It will fluctuate. But he says long-term investmentstend to weather these challenges and help the investor come out ahead.

"There is always some type of economic or political uncertaintythat we all have toface as investors," says Boston, author of Smart Money Moves for African-Americans and host of the Moneywisetelevision series shown on Knowledge TV and public television stations across the country. "But the only thing that present fluctuations in the stockmarket should remind us is that we should be investing long-termrather than short-term."

Examples of long-term investments, Boston says, are putting money aside to financea college education, purchase a new home, or save for retirement. It's money that you can commit to investing for at leastthree to five years. Along with long-term investments, he recommends that people maintain a balanced and diversifiedfinancial portfolio that includes a cash reserve for emergencies. Most experts say the emergencyfund should equal three-to-six months of living expenses that is not investedin stocks.

"The key is to make sure all your eggs are not in one basket," says Boston."You need diversity in your investments."

If you have short-term needs for the money you haveinvested in the stock market, Hobson saystalk to your financial planner about whether it's appropriate to take that money off the table. "We have aturtle as our logo," she says. "We tell our investors that slow and steadywins the race, because investing is a long-term proposition."

Now is the time to take stock of your investmentgoals and options, experts say. Review your portfolio with your financial planner.

Everyone should have a written financial plan. If you don't have one, use this opportunity to begin.Outline reasons why you purchased the stock and design an investment strategy to helpmeet your goals. This meeting could also be a great time to discuss any concerns you have over the economy.

Ask yourself and your adviser ifthere is still a good reason to hold on to stock inthat mutual fund or company or if now is the time to change.

"A lotof the time if the company is still a good company, but the stockfell because the market fell, you still might want to hold on," says Boston. "But if company earningsdidn't meet expectations or if a new product did not sell, you might have reasons to change."

Remember,Boston says, any loss is only on paper until you cash out. Even thougha company's stock may have gone down, it mayrebound if you hold on.

Also, consider tax implications of selling your stock. In most cases, you should continue your normal investmentstrategy, buying stock and reinvesting dividends at a regular pace.

"We cannot use the current uncertaintyin Asia to keep usfrom investing in America," says Boston.

"There is always some reason not to invest. It might be an economic issue or a political issue ...but when you look at the market afterevery crisis, it rebounds and goes higher."

Another benefit of market declines is that it providesthe chance to buy stock you could not usually afford. The prices of stocks for companies that seemed unreachable may be at moremanageable levels.

"It's a great time to bargain hunt when the stock market is having thistime of volatility," says Hobson.

A tip to minimize risk, shesays, is to purchase stocks that are undervalued and out of favor so when themarket goes down, the prices don't have as far to fall. Hobson advises new investorsto invest in what they know. A good place to start is by acquiring stock in your company or in something youor your children use every day.

Boston says things look good right now for the American economy. Shaken by uncertainties of other countries, many international investors are turning to Americato invest. For those who haven't begun investing, experts say, it's time to pick up the habit.

A Charles Schwab & Ariel MutualFunds survey reported that African-Americans have half the retirement savings of Whites. While more than half of Whites polled had most of theirmoney invested in mutual funds and brokerage houses, the survey found more than one-third of Blacks stashedthe majority of their money in banks.

The key to building wealth in our community, expertssay, is to follow a financial plan of long-term investment in stocks--which reap the best returns.

"You have to look at every day as another day to save a dollar and a dream,"Boston says. "The dollar is the American dollar, but the dream isour own."