Investing Early: Our ‘ Seed The Change’ Initiative

Investing Early: Our ‘ Seed The Change’ Initiative

October 31, 2018

What is 'Seed The Change'?

The Problem:

Many people are underinvested or have no retirement savings. This statement is magnified when referring to women and people of color. Our young girls need to have investment mentorship earlier in life.

This is where 'Seed The Change' comes in.

The Research:

-Women take on more student loan debt than men

-Women make 80 cents on the dollar - African-American Women and Latina women make 64 cents and 54 cents respectively when compared to white men. Debt is paid back slower

-Millennial women are more likely to abdicate investment decisions to their spouses - which leaves them unaware and uneducated with investing

-Women pay "Mommy Tax' - being out of the workforce to take care of children or loved  ones, therefore lowering their social security and retirement contributions

-Women live longer than their spouses therefore needing more retirement money

When all these stats are compiled together, researchers have found that a woman is 8 out of 10 times likely to live ten or more of her retirement years as the sole financial manager of her investments (or lack therefore). Women are more likely to experience ‘retirement poverty’.

Alumni360’s Part of the Solution:

We are implementing the 'Seed The Change' Investment Initiative - piloting with Alumni360 students and then launching regionally and then nationally to ensure young women are investing earlier in life.

Since time is one of the most critical factors in growing our investments, it is imperative to get our students investing early and assist them in investment literacy while they are investing. The amounts are small because we aren’t focused on the money right now, we’re focused on developing the muscle of having investing be an inherent part of their lifestyle. This behavior focus will be solidified by the time they start their career making a more significant income.

 

All of the students in the Alumni360 program have gone through financial literacy and basic investment literacy. They will be first generation college students and now, with this new program, they will be first generation investors as well. Our goal is that they will educate their parents and community members as they themselves become seasoned investors over time.

The Program:

‘Seed The Change Investment Initiative is an Alumni360 program that encourages graduates of the program to become investors by utilizing a ‘seed’ donation from seasoned professionals. These professionals will donate $100, assist the student in setting up a ROTH IRA with the student's choice of investment firms and check in with the student on a quarterly basis. The student pledges to contribute a minimal amount each month and to (hopefully) not withdraw the funds until retirement. They also pledge to increase their contributions once they are able.

Social Psychological Component:

We often say to people, "You should invest!" We then walk away to live our lives and they are left there unaware of how to get started. They are uncertain of which questions to ask and might feel intimidated to pursue investing, especially if they haven't been exposed to it previously because of demographical barriers.

So they do nothing.

Ten years pass, then twenty and then suddenly they are 45 years old and just starting to invest. This is tragic because we know how valuable time is when it comes to investing and compounding interest (with the rule of 72).

 

This 'Seed The Change' program has a built in mentor accountability system to address this issue. By having a 'Seeder' be a professional woman who takes a minimal amount of time to help the Seedling set up an account, mentor her AND invest in her by giving her $100, this increases the likelihood of the Seedling carrying through her pledge of being a regular investor, setting goals and checking in with her mentor.

Knowing someone donated money to support them in this area will encourage the Seedling to stay committed, like having a workout partner meet you at the gym. You show up because someone else is showing up for you. Accountability is key.

A 'Seed The Change' Story -> Into A 'Seed The Change' Movement

Genein Letford, is a professional woman who has been investing in her ROTH and a 403B for over 10 years and is excited to ‘seed’ a young woman. Brenda is a 19-year-old student who has been working for 2 years and is opening her first ROTH IRA with Ms. Letford’s $100 seed. Ms. Letford helps Brenda set up her account and reviews the ‘Beginner’s Guide To Investing’ with her. Brenda sets her investment goals, committing $50 a month to her ROTH IRA. Genein checks in periodically (via email) to see if Brenda has reached her goals and to offer encouragement and advice.

 

Genein submits their picture and mini story to the ‘Seed The Change’ website to share the movement with her social network and the nation.

Genein then reaches out to four of her professional friends and asks them if they know any young women in their own social spheres who should began their investment journey. She shows them Brenda’s story and shares the ‘Seed The Change’ initiative. Her investor friends are excited to be a part of this movement and downloads the ‘Beginner’s Guide To Investing’ to share with their young women seedlings. They donate their seed and each of those four women find four women in their social circle to inspire to be a part of the movement. It goes on and on…..

The Movement:

It is our dream that this movement will catch on and every professional women will take the time to seed a young employed person in their life. It starts with mentorship and discussing these investment concepts earlier in life. Visit Seed The Change for more information!

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