OneTransaction^® to Build Generational Wealth Save and Invest

We, at OneUnited Bank, want you to focus on #OneTransaction to build generational wealth, which includes savings and investments.

What Wealthy People Know

Wealthy people know the first rule of saving is to do it automatically.

If your paycheck goes straight into your pocket, your money will go straight to spending. That’s why setting up an automatic savings plan, where funds automatically move into a savings or investment account, is the most effective way to save.

Wealthy people also know that the odds of winning the lottery are 1 in 292 million! So, playing the lottery is not a substitute for saving.

Breaking it down

The amount of money you save depends on your budget, but even saving $25 a week can add up quickly.

Weekly Savings

$ 0

Annual Savings

$ 0

Savings in 5 Years

$ 0

Save Over Time with an Automatic Savings Plan

With even a basic account, you can choose to invest and possibly save more.

Weekly Savings	Annual Savings	Savings in 5 Years
Weekly Savings: $25.00	Annual Savings: $1,300.00	Savings in 5 Years: $6,500.00
Weekly Savings: $50.00	Annual Savings: $2,600.00	Savings in 5 Years: $13,000.00
Weekly Savings: $100.00	Annual Savings: $5,200.00	Savings in 5 Years: $26,000.00
Weekly Savings: $300.00	Annual Savings: $15,600.00	Savings in 5 Years: $78,000.00

(Excludes Interest)

The Program

Here Are 8 Steps to Get Started

Have a Family Meeting

Start by sharing this article with your family members to let them know you are seeking to create generational wealth. Saving is part financial and part emotional, so having your family on board is helpful. A family meeting also instills in your children the importance of saving.

Set Up an Automatic Savings Plan Immediately

There are so many saving options, it can be confusing at times. However, there is a big difference between having an automatic savings plan versus having no savings plan at all. So, start with easy options, such as:

Set up an automatic bi-weekly or monthly direct deposit from your checking to a savings account or divide your current direct deposit between your checking and savings account. (Your payroll provider can easily do this.)
Use programs that will automatically round up your purchases into a savings account, like our AutoSave service.

Set Up a Retirement Plan

We know…you’re either too young to think about retirement or too old to plan for it now. Regardless of age, retirement plans have great tax benefits and will supplement your social security payments. If your employer has a 401(k) or 403(b) Plan and matches your contribution, that’s “free” money if you participate. Contributions from your salary or wages are made automatically thereby providing a great automatic savings option. Retirement plans also provide an opportunity to invest in stocks, bonds, money market accounts, and/or mutual funds.

Set Up a College Fund If You Have Children

College tuition is expensive and student debt can be a burden on the next generation. There are many different types of college savings plans to automatically save and reduce the burden of the cost of higher education. Options include mutual funds, custodial accounts under UGMA/UTMA, qualified U.S. Savings Bonds, a Roth IRA, a Coverdell Education Savings Account (ESA), and a 529 Plan. Each of these options has pros and cons.

Investing in the Stock Market

Owning stock in publicly traded companies or mutual funds that invest in stocks and bonds can provide great returns, but it’s important to understand the risks. The returns on stock market investment are much higher over the long term than the return on savings accounts. However, investing in the stock market is not FDIC insured whereas a savings account is FDIC insured!

According to NerdWallet: The average stock market return is 10%, which is much higher than interest rates on a savings account. However, the returns in any given year can be positive, even higher than 10%, but also negative. Yes, you can lose money in any given year. The stock market is volatile, which reflects the risk. It’s better to have a longer-term (5 years or more) investment horizon.

Investing in Real Estate

There are many real estate investment options including direct investments in single-family, multi-family, commercial real estate, vacant land or investing in Real Estate Investment Trusts (REITS).

Homeownership is the biggest difference between Black and white wealth. Home is where you live, but it’s also a real estate investment. Paying rent helps your landlord build wealth. Owning a home helps you build wealth! There’s also multi-family property, where you (and family members) can buy a home with 5+ units to rent out. Investing in multifamily property gives you current rental income, tax benefits along with potential property appreciation. For direct investment in real estate, there’s an adage that applies: Location, location, location! The long-term value of similar property varies widely by location. So, choose the property and location wisely.

Check out this Guide from Fortune Builders

Publicly traded REITs are companies that own commercial real estate (like hotels, offices, and malls). You can invest in shares of these companies on a stock exchange. By investing in REITs, you are investing in the real estate these companies own, without owning real estate directly. REITs are required to return at least 90% of their taxable income to shareholders every year. This means you can receive attractive dividends. With publicly-traded REITs, you can buy or sell shares on the stock exchange, which makes the investment more “liquid” (or accessible) than buying or selling a home or direct investment in real estate. However, as with any investment, there are risks (REITS are not FDIC-insured) and you can lose money. It’s better to have a longer-term (5 years or more) investment horizon.

Check Out Cryptocurrencies

Cryptocurrencies, like Bitcoin, work by using blockchain, a decentralized technology spread across many computers that manages and records transactions. More than 6,700 different cryptocurrencies are traded publicly. The total value of all cryptocurrencies on Dec. 18, 2020, was more than $645.7 billion, according to CoinMarketCap.com, and the total value of all bitcoins, the most popular digital currency, was about $421.7 billion. Many investors see cryptocurrencies as mere speculations, not real investments because they are not FDIC insured like a savings account and they do not generate cash flow like a stock or multifamily property as examples. So, for you to profit, someone must pay more for the currency than you did. The value of cryptocurrencies fluctuates wildly, indicating they are risky. So, beware.

To buy cryptocurrencies, you’ll need a “wallet,” an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum. Here are NerdWallet articles on how to invest in Bitcoin.

Avoid Scams

There’s a well-known saying: “If something sounds too good to be true, it probably is!” Avoid investing in “opportunities” that promise high returns with low risk. Investments that offer higher returns, like cryptocurrencies and the stock market, have higher risks. And investments that offer lower returns, like savings accounts, have lower risks. To avoid scams, consider working with a financial advisor who you trust and/or consult with family members or friends who have investing experience.

This summary is to get you started. Please check with a financial advisor, an attorney, family members, and/or friends. Simply focus on getting this OneTransaction done to build generational wealth!

OneUnited Bank is not a financial advisor and recommends you discuss with your family and a financial advisor. All services, including non-real estate secured business loans or equity capital, are not offered by OneUnited Bank. To learn more visit our Loans page.

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OneTransaction® to Build Generational Wealth Save and Invest