The Power Of Saving (Continued for The Seed)

I met Jerilyn And Ashley when I interviewed them for Our August Edition of The Seed entitled Be Naturally Beautiful after the interview we talked for a while and Jerilyn (pictured left) mentioned that she bought her first car with money she earned from Disney stock. Chris had given me the idea about the (WE)alth article a few months before and I asked Jerilyn if she would help me and she agreed.

Jerilyn is the Co-founder of Afiya LLC. Afiya sells a vast array of all natural, haircare and skincare products. Jerilyn has been investing practically all her life, so I decided to ask her a few questions that might help those of us who may not know much about finance. Below are her answers.


Henry: How old were you when you started investing?

Jerilyn: I started investing when I was about 5 years old. At that time I was guided by my parents, by middle school I was able to research investment opportunities independently. However the investing was still guided by my parents.

Henry: How did you get started?

Jerilyn: My parents started me out with the simplest form of investment which is basic saving. They opened an account for me at their credit union. They would give me a weekly allowance of $5 dollars. They made me put half of it in my savings account. They also made me save half of all the money I received for Birthdays and Christmas. My father always watched the ticker tape of the stock market on CNN and would read the stock information in the newspaper. When I was about 10, my father encouraged me to invest some of the money I had been saving into the stock market. At that time, I had about $1,500 dollars in my savings account. I decided that I wanted to buy stock in Disney, one of my favorite channels at the time. I used the money I made off of that stock purchase to buy my first car.

Henry: What should people do before they start investing?

Jerilyn: I believe that people should do a good amount of research before they start investing. Decide what your goals are for investing. It is important to conduct research so that you can invest in a way that will help you reach your goals. It is imperative that you understand all of your investment options before you develop your investment strategy. You also should have an understanding of the industries you are considering investing in. In many industries there is a buying season, where stocks prices are traditionally lower than other times in the year. Good research is the best first step to any sound investment strategy.

Henry: What options are available for people with limited financial resources?


Jerilyn: People with limited resources can consider the following options:

1. One of the best investments a person can make is to pay off debt first. For example, if you have a consumer credit card and your payment is $36 per month. If you pay that card off, it makes it easier to divert money to investing.

2. If you do not have debt, take an inventory of your current expenses to see where you can re-allocate funds for investing. Cutting back on things like eating out, movies, shopping, etc can free up cash for investing.

3. Start saving early and regularly. It is one of the simplest forms of investing. Savings accounts pay compounding interest. Over the course of a couple of years you can see a sizeable increase depending on your rate of saving. That’s why it is important to start as early as possible. Once you have accumulated 1,000- 3,000 you can roll the money into a money market savings account with a higher interest rate.

4. Buying shares for the long – term (15+ years) is an ideal option for those in their twenties to forties. Also consider saving up an initial $ 500 - $1000 to buy units in a professionally managed fund. Then make regular contributions to grow the portfolio. This was my mother’s strategy. She was a school teacher whose highest earnings were in the mid $40,000s. At retirement she had accumulated well over $100,000 in her mutual fund. This was a great supplement to her retirement benefits.

5. Focus on low risk, relatively liquid assets. CDs and Savings bonds are good to consider. You will need to research interest rate trends and maturity dates in order to find the right mix for your goals.

6. Now if you are just itching to play in the stock market. Consider using a service like Sharebuilder. Research penny stocks that are expected to gain value. Sharebuilder promotes several $4 dollar stocks. Research municipalities which have a tendency to rise over the long term.

Henry: What do you think about pooling your money with family/friends to invest?

Jerilyn: I do not recommend pooling money for investment. A person’s investment strategy is very personal, usually driven by unique factors in that person’s life. Changes in a person’s life(new job, job loss, birth of a child, buying a house, etc…) can cause their individual strategy to change. Once you start pooling money, a person’s decision to change their investment strategy changes the portfolio for the entire group. In this situation a single persons actions can affect your ability to meet your investment goals.

I do advocate starting small investment clubs with family and friends. You can share and discuss information, research, new opportunities, etc…If you do decide to pool money, draw up contracts that spell out procedures and consequences for adding or withdrawing money early. It may be necessary register the group as an LLC and invest as a business entity. This way the entity controls the funds and procedural and decision making processes are filed in the articles of organization with your state, and no one person can lawfully manipulate the funds without the consensus of the managing members.

Henry: How much money do you need to start investing?

Jerilyn: You only need a couple of dollars a week to start investing. Remember that saving is the simplest form of investment. If you save $6 dollars a week for investment you will have $312 dollars to invest at the end of the year. Remember saving and investing should increase as your income increases.

For more information about Afiya products visit their website www.afiya4you.com