Leading African American Investment Manager Calls for SS Reform

June 21, 2002

Jesse Brown, president of Krystal Management, one of the country's top African American investment advisors, and member of Cato's Social Security Advisory Board recently offered this advice:

"No longer invisible, but still under invested. I am concerned that far too many middle-class Americans plan on starting their own investment savings plans tomorrow. It reminds me of a sign I saw in a neighborhood bar: Free Beer! Tomorrow! Naturally, the free beer never flows because tomorrow never comes. All too often people never get around to starting a long-term savings and investment plan. Procrastination is the easiest response. But the results can lead to indefinite hard times. Like a friend of mind once said, "If you keep on doing what you're doing you're going to keep on getting what you've been getting." So if you don't like what you've been getting, and I'm sure you don't, you should change what you've been doing." You're supposed to be financially secure. You're supposed to have a comfortable retirement, afford college tuition, and go wherever you please when you please. By investing wisely, you can turn your meager savings into long-term wealth. But just as prosperity is your birthright, your divine right, it is also your responsibility. Having a dollar and a dream is not enough. You must invest in that dream in order to build lasting wealth. I was nearly driven to madness when I read that the residents in just one predominately black ward of Chicago had spent $70 million on lottery tickets. Drive through that neighborhood and I will guarantee you will not find one millionaire. What if those people had invested in stock? What if they'd bought a mutual fund returning 16 percent a year? What if they had built long-term wealth that could be building upon and passed from generation to generation? If you don't feel prosperous, I can guarantee that you have not committed yourself to prosperity by setting goals and developing and sticking with an investment plan. Take your financial future into your hands and be the force that changes your life for the better. I'll agree that there are more prosperous Americans today than ever before. But where is that money going. Too many hardworking Americans live paycheck to paycheck even as their white counterparts at the same income level are investing in individual retirement accounts and investment clubs. Many have missed out because they are afraid to use the money they have as leverage to create the wealth they deserve. Historically middle class Americans have had less access to information about stocks and bonds, but that time is over. You can't turn on the television without hearing some reference to the changing market. Stocks are not that complicated."

"Not long ago I had to opportunity to learn about the proposed changes in Social Security. As you know every workingman and woman in America pays a 12.4% social Security tax on earning up to $76,000. Someone earning $30,000 a year would put in $3,720.00 that is over $300.00 per month. That same $300 a month placed in a growth mutual fund with the same assumed rate of return would turn a 25-year-old worker who stayed on the job till his retirement age of 65 years old into $3,564,726. But in Social Security he will get a $1200 pension until he dies. Doctors told the Social Security folk when they put the program together back in the 1930's that the average age of an African American's death was age 62. So, I guess they thought we would never collect any of that money. Even now that age expectance is longer we still do not get to carry any of that money with us."

"That is all about to change. Listen out for the words Social Security Choice. This is going to be the watchword in government for the next few years. It will signal Social Security reform."

"The Cato Institute, a think tank in Washington, has worked with the Social Security Reform commission to come up with a plan to reform Social Security and see to it that the Trust Fund does not run out of money and that those who put money into the system can develop wealth and pass it on to their heirs. Congress is beginning the debate on the reform of Social Security now."

"Very few of us now really depend on Social Security because we have been told that the Trust Fund is running out of money. It is for that reason that we must learn to pay ourselves first and develop saving and investing accounts on our own."

"Fancy stockbrokers may try to impress you but it boils down to simple math and commonsense. If you can balance a checkbook, you can understand those basic investment vehicles that build wealth. I am not a miracle worker, I will not promise you instant wealth or surefire investment techniques. But if you continue to read this column you will learn the basic principles that have given hundreds of my client's financial security. These working class and professional men and women now have tens of thousands of dollars and a peace of mind they've never known."

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