5 Steps to Building a Black Wealth According to a Millionaire Mentor
- Cedric Nash founded the Black Wealth Summit to share investing principles with black Americans.
- He believes that closing the racial wealth gap begins with investment – in the market, in real estate and companies.
- Participate in a path to building black wealth that begins with “wealth literacy”.
Cedric Nash’s enthusiasm for helping African Americans close the racial wealth gap is evident when he talks about this topic. “Personal finance has always been my passion,” he says.
This passion led to Nash founding the Black Wealth Summit and serving as its president and CEO. The conference is “unapologetically dedicated to promoting black prosperity,” where participants can learn about investing from sessions led by black financial professionals.
Nash told Insider that he founded a consulting company that has grown to 300 employees and annual revenue of $90 million. Along the way, he learned his money lessons as he invested in real estate, securities, and other businesses. He’s distilled his investing principles into a set of steps he calls “Millionaire Money Moves,” which he shares on social media and will be included in an upcoming book.
Nash spoke to Insider about his financial moves and overcoming systemic racism, and shared a five-step path to building black wealth.
1. Understanding Wealth
The first step, according to Nash, is to understand wealth: why it is important, how to get it, how to increase it, and what causes it to decrease. Understanding the path to financial security is critical. “If you can control your money, you can choose how you live your life,” says Nash.
This includes redirecting spending from the trappings of wealth, such as expensive cars or luxury brands, to less obvious wealth-building tools, such as investment accounts. Nash recognizes the need to check for success within the African-American community. He sees the desire to show wealth — which might help people feel respected — as an after-effect of slavery.
“We get that attention and that feeling of real success,” he says. “It’s not enough to get it and nobody knows it.”
He explains the shift in mindset as follows: “I’m going to start investing these profits, I’m not going to live these profits.” It’s the difference between looking rich and being rich. Nash points out that you can’t have both at the same time, and spending to look rich precludes using money to make more money.
He says he believes that African Americans do not need financial literacy, which he defines as learning compound interest, how to balance a checkbook, etc. in value and generate income.
2. Make the goal of wealth
Your wealth goal might be financial comfort, independence, becoming a millionaire (which Nash refers to as not all that much money today), or getting rich, which he defines as a net worth of $5 million or more.
You may even aspire to become super rich or a billionaire. At the very least, your goal should be financial independence when you retire, and having a clear goal will help you make a plan for getting there.
3. Get the capital to invest
“You have to get some extra cash, and put it into practice” by investing to grow wealth, says Nash. If you live from paycheck to paycheck, he suggests improving your job to earn more or doing side work or freelance work to raise extra money.
You can also get additional money to invest by borrowing or raising capital, but both are risky for African Americans due to discrimination in lending. Black entrepreneurs also have a more difficult time obtaining venture capital to support their businesses.
Nash points out that you don’t have to be a high-income earner to build a fortune, just a steady saver. He points to his grandmother, a single mother who worked in a laundry earning $200 a month, and was able to save enough to buy and pay a house, buy a car, and pay it off.
“What we can control is what we do with what we have,” he says. “If we wait until the game is fair, we will never start.”
4. Invest consistently and intensively
Nash wants African Americans to invest more, increasing the volume and intensity of investing money in wealth-building assets. Consistency is critical: Save money from every paycheck, whether it’s a little or a lot.
Younger investors seem to get the message. A Schwab survey of black investors finds significant disparities between black and white stock market holdings in the older age groups, but the gap is closing for those under 40.
Heavy investment does not mean going into get-rich-quick schemes. This means choosing slow and steady investments rather than promising a quick return, noting that 7% is a good rate of return. “When you tell me it’s fast, easy, or free, my antennas go up,” he says.
Nash suggests getting started in the stock market. He loves index funds and also recommends buying individual stocks in companies that have a proven track record of stability. The approach is to choose one company from each of several business sectors and emulate Warren Buffett by holding those investments for the long term.
“The one thing I try to make my community understand is that we can’t get into investing,” says Nash. “We have to make it a priority – and that’s going to close the racial wealth gap.”
Nash also recommends investing in real estate, which he noted has been a way to build wealth “since the beginning of time.” His advice: “Be busy investing in multifamily properties.”
5. Use entrepreneurship to increase your profits
“The highest percentage of millionaires come from entrepreneurship,” says Nash. He believes that the potential profits, and therefore the ability to build wealth, are greater when you own a business.
At the same time, he is realistic about the obstacles to entrepreneurship success for black business owners. For example, Nash was unable to obtain capital when he started his consulting business in 1997, so he had to restart it, slowing his growth.
To overcome obstacles, says Nash, “you have to build slower and be a salesperson.”
But Nash believes that everyone has the potential to be a business owner. “You don’t need a gift from God to be an entrepreneur,” he says. The skills you need to run a successful business can be learned.
“It’s all about the mindset,” says Nash. If African Americans understand the path to prosperity and make the decision to build assets, anything is possible. And he feels the urgency to build a black fortune. “We have no time to waste,” he says. “It’s time to move the millionaire’s money and start investing in assets.”