First Generation Investors Teach Parents About Stocks
When Rafael Salinas was in high school he had no idea what the stock market was like. Now he helps his whole family manage their investment accounts.
Salinas’ parents grew up in extremely poor California. As children of Mexican immigrants, the American financial system was completely alien to them. Her father barely knew what a credit score was until he was 60, says Salinas. They never even thought about investing, adds her mother, Christina Corona-Salinas.
“A lot of people have generations of investors behind them,” says Salinas, 29. “But people like me, people who grew up less fortunate, especially first and second generation immigrants, we just don’t have that.”
Salinas certainly does not blame his parents for not having learned to invest in the stock market. When his parents were his age – before the Internet – investors had to pick up a phone and ask a stock broker to do their trades for them. Investors needed to know what to ask for and have the money to actually invest (there weren’t any fractional stocks like there are today, so you can buy as little as $ 1 of a stock. instead of the whole).
Times now, of course, have changed. In the 1990s, the internet opened the door to the financial world, allowing investors to buy and sell stocks and funds online. Now investing is as easy as opening a trading app on your phone and doing a few swipes of a few seconds. According to 2018 data from FINRA Investor Education and Foundation and the CFA Institute, around 31% of millennials with taxable accounts started investing before the age of 21, compared to 14% of Gen Xers and 9% of babies. -boomers. A recent study also found that 15% of U.S. stock investors started in 2020 and their median age is 35 (compared to the median age of 48 for those who started investing before 2020).
With so many young people crammed into the market, it makes sense that they are now becoming the teachers.
When Salinas graduated from college with disposable income from his work and living at home, he set out to learn how to make that money grow. He spent hours scouring Twitter to learn new financial terms, reading blog after blog about investing strategies, and joining online trading groups, which eventually led to his investing in stocks and stocks. cryptocurrencies.
And now, just like his parents taught him to tie his shoes and ride a bike, he turns around and teaches them how to invest.
When the child becomes a teacher
Salinas’ father lives on disability pay from his time in the military and his mother, now 68, plans to work another 5 years. But even though they started investing late, their son’s help significantly improved their financial lives.
“It’s scary how the stock market works. You have to be very careful and informed and I didn’t have any of that knowledge, ”said Salinas’ mother Christina. “It opened my eyes to see how my money can grow for my retirement. “
The barrier to entry for investing in stocks is significantly lower for the Salinas generation than for their parents. Not only can investing be done through laptops and smartphones from the comfort of your home, there is also a lot more information available for everyday investors. The internet has made it easy for everyday investors to quickly learn about investing strategies like buying the drop on YouTube, or checking Twitter and Reddit to see which meme stock is being bought. Of course, this has its downsides, such as inexperienced investors engaging in risky investments like cryptocurrency, and financial misinformation rampant on social media. But for people who haven’t inherited their family’s investing knowledge, it can also be a gift. A gift that, in many cases, they wish to pass on to their families.
Salinas and her parents check their investment portfolio together about once a month. Her younger sister, who is so afraid of risk that it took her years to convince her to get a credit card, has been investing for two years. Salinas is now the benchmark for other family members.
It is a common role for the children and grandchildren of immigrants. They see that participating in the scholarship is possible for them in a way that it never seemed possible for their older parents.
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Growing up in a working-class family of Portuguese immigrants, Nicholas Antunes, 32, thought investing in the stock market was “something only the rich do” until he attended high school at St. Benedict’s Prep School. of Newark, New Jersey.
“A teacher at school told me you can start with just $ 10, that was revolutionary for me,” Antunes says. He wanted to share his newfound personal finance knowledge with his parents, but found it more difficult said than done.
Antunes parents weren’t quick to dispel their belief that investing in the stock market is the same as gambling, and that the best thing you can do is save all your hard-earned money in savings accounts. Plus, they just saw Antunes when he was a kid – because he was (even though he could explain to his father what the Nasdaq and the S&P 500 were by watching the evening news).
It wasn’t until Antunes went to college that his parents started to trust him more with finances, and since then he’s taught them why long-term investing is important. He helped them understand what an Individual Retirement Account (IRA) is and why they should contribute the maximum amount if they can. He recently helped his father file for Social Security and they are working together to divide that income distribution and put it in stocks, bonds and savings.
Courtesy of Nicholas Antunes
“It feels really good to be able to give them that”
It took a long time for Ariel Wu’s parents to regain confidence in the stock market after the 2007 financial crisis. Then COVID-19 hit.
Wu’s parents immigrated to the United States from Taiwan when she was three years old and their exposure to the stock market was limited. When the market collapsed in 2008, they saw the hard-earned money they had put in the market disappear and sold all of their stocks.
“They thought, ‘Our actions are worthless, we can only trust cash,'” Wu said.
As the rest of the economy and the market recovered, Wu’s family did not.
After a few years, Wu’s father reluctantly started buying stocks again, but when the market collapsed in March 2020, that little confidence in the market was broken. He wanted to withdraw all the money again.
His daughter – now an adult in her mid-twenties who pored over investment books compared to the college girl she was in the 2008 stock market crash – arrested him.
Although Wu was not the first in her family to invest, she was the first to learn how to invest strategically. The way her father invested was, she says, gambling-like.
Wu therefore dived into her parents’ wallet (which she said was “a bit of a mess”) and reallocated much of the money to index funds. Now it’s a balanced portfolio of 80% stocks and 20% bonds.
The US financial system is in many ways inaccessible to immigrants. According to the Brookings Institution, foreign-born residents are much less likely to use a wide range of financial services – such as savings and chequing accounts, business loans, and mortgages – than those born in the United States.
It was weird being the one to teach her parents, Wu says. Even though she knows that isn’t necessarily true, she feels like all of her peers whose parents grew up in the United States have learned. basic knowledge of how to invest money. For his parents, it was a whole new system, made more difficult by the language barrier.
“Knowing that they were learning the system around the same time I was learning it gave me a sense of responsibility,” Wu said. “It’s weird because you know your parents know a lot, but the half the time you forget because you teach them about America. “
And that’s where the new investors come in: educators tactfully trying to delve into their parents’ finances, which is never an easy thing to do.
Time in the market beats the pace of the market.
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Years after Bulgarian-born Tess Zigo worked in corporate finance and helped her parents manage their finances remotely, she realized she wanted to be able to help other families with similar challenges. . She therefore became a Certified Financial Planner and currently works at Emerge Wealth Strategies in Lisle, Illinois.
Many of its clients are part of the sandwich generation – those responsible for caring for both their children and aging parents. They often find that by the time their parents prepare for retirement, they haven’t saved or invested enough.
Zigo wants to help its clients secure a stable financial future for their immigrant parents.
“It’s really good to be able to give them that because they’ve worked so hard all of their lives,” she said. “They sacrifice so much for their families.
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