- Just ahead on Black Issues Forum, building wealth shouldn't feel like guesswork, but in a world full of financial advice, how do we know who or what to trust?

Well, we cut through the noise and get real about building wealth, access, and opportunity, and learn what it takes to move from surviving to investing.

Coming up next, stay with us.

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(upbeat music) ♪ - Welcome to Black Issues Forum, I'm Kenia Thompson.

From cryptocurrency to artificial intelligence, today's financial landscape is evolving rapidly, but with so much information and misinformation, how do you know what's real, what's risky, and what actually builds wealth?

We're breaking it down from foundational financial literacy to modern investment strategies.

We're talking about what it really takes to make informed decisions.

Joining me first is Patrick Lyons, a member of the 100 Black Men of the Triangle East, an organization that's focused on mentorship, education, and economic empowerment.

He is also the co-chair of the organization's Economic Empowerment Committee.

Welcome.

- Thank you for having me.

- Of course, this is a great conversation, and it sparks because my son is part of 100 Black Men of the Triangle East, and he is on the Economic Empowerment Committee.

- Stock market.

- Well, part of it.

You guys are doing a stock market game, and we'll talk a little bit about that, but that sparked this idea of, well, let's talk about it on the show, 'cause a lot of folks, you know, breaking down investment in stocks and trading can get a little confusing or overwhelming.

I'd love for you to start off by kind of defining those different categories.

What are stocks, and what's investing, and then what's crypto?

- Well, stocks represent ownership in a company, so when you buy a share, you actually become an owner in that company.

Investing is what is longer-term wealth building, so you're thinking about not short-term moves, but just thinking about how you're gonna build wealth for the longer term.

And crypto is more of a evolving digital asset right now.

Still fairly new, but it's definitely an area where there's a lot of interest in investing right now.

- I know that crypto seems like a buzzword, because like you said, it's fairly new and, I guess, trendy, but I honestly don't understand it, and I think a lot of folks that I speak to also don't understand this digital currency world.

How could you break it down for us?

- Well, crypto, right now, it's, like I said, still evolving, and there are thousands of them out there.

There are about 18,000 different cryptocurrencies out there.

And so, right now, still in the early adopter phase, because not a lot of companies are using it as a form of payment.

And so, I think as we go through this, there's gonna be a shakeout, and there's gonna be some that fall by the wayside, but there are gonna probably be some that maintain, like Bitcoin and some of the other bigger ones, but a lot of these cryptocurrencies are gonna probably fall away.

- So, it's just like the dollar, essentially.

It's just another form of currency, but it's all electronic.

- It's all electronic, but I guess the other thing to keep in mind is that it's unregulated.

So, it's not like the dollar, where you have the government more or less backing the full faith of the dollar.

You don't really have anybody backing these cryptocurrencies.

- Okay, all right, that makes sense.

Thank you for clarifying that.

If there's, you know, I'm at a point where I'm wanting to dabble into investing or trading.

What are some of the first things we should know?

- Well, in terms of investing, we always encourage our mentees and the 100 Black Men to invest in what you know.

So, we always ask them, what are some of your favorite products?

And they may talk about, we like Nike, we like the iPhone.

And so, those are things that they're familiar with, and so we encourage them to do more research and find more products about what they make, and encourage them to invest in what they know, because you are a lot more successful when you understand what you're investing in.

So, when it doesn't work out, you can always kind of go back to what your original thesis was, and if something changed, maybe you get out of it.

But if it's a case where it's just some short-term weakness, maybe it's an opportunity to buy that stock at a sell price, at a lower price.

So, that's what we encourage.

- Now, I've heard some people think that investing or trading is kind of a get-rich scheme, like you can get a lot of money really quickly.

Is that true, and what are the downsides to it?

- Well, from the statistics, most people who do the short-term day trading, most lose their money.

I think I've heard that 90% actually lose money that way.

You can make money, but most of us don't have the time to sit there and watch a stock all day long, and I think it's just better when you think about longer-term investing, buying something that you really believe in and holding it for the longer term.

But there are some opportunities sometime in short-term trading where there might be a short-term opportunity, like with oil prices, where they've been going up because of the conflict in Iran.

But those are opportunities that are really kind of hard at times, so it's really best to just focus on the longer term.

- So you said day trading is different from short-term?

- It's kind of in that same bucket.

- Okay, and then long-term is how long?

- I would say anything over a year time frame, just thinking about retirement, or maybe if you're using your long-term investments to build up for a down payment on a house or something like that, but not just, anything less than a year's time frame is really not really long-term investing, so you need to think more longer term.

- What are some of the more popular companies that you find folks investing in, or maybe even, I guess let's go ahead and enter in the work that you're doing with the young men.

So you said they'll identify companies that they like, but are those usually, are we looking for top 10 companies or top 20 companies to invest in?

- It just kind of goes back to what they have an interest in.

And so one thing we've been doing this year with the stock market game is kind of taking into current events into account what's going on.

So because of the conflict over in the Middle East, we've been encouraging them to take a look at energy stocks.

And they've been benefiting from that.

Also, defense-related stocks, because of the missiles that are being fired, there are companies that are making those.

And so we've been encouraging them to take a look at that.

So we're not really telling them, "Okay, you need to buy this."

We're trying to give them themes to take a look at based upon what's going on in the world.

Because the thing about the stock market game, it's a short-term game, it runs for like 12 weeks.

And so although we're trying to preach long-term investing, in some cases we're having to kind of look at short-term opportunities because of the game, the length of the game.

- So explain to folks, what are people actually investing in, or I guess participating in when it comes to the stock market?

- They're participating in the growth of companies.

So when you buy in a company, you're an owner of that company.

And so when they grow, you're growing with that company.

So when they're making profits, if they pay out dividends, which are a portion of their earnings, you as a shareholder receive that as well.

So you're participating in the growth of that company.

- If someone wanted to start investing, but they don't have a lot, is it possible to start trading with a small amount of money?

Or should you have a certain amount of money?

- Well, things have changed over the years so that it has become a more level playing field for investing today.

Because I remember 20, 30 years ago, you might need to have five, $10,000 to open an investment account.

But today you have companies like Acorn and Robin Hood and others where you can get started with a minimal investment.

So it's important to get started now because you don't need a big amount to get started investing.

So you can just go ahead and get started and get that discipline going.

- And when you mentioned Acorn and Robin Hood, those are platforms, right?

So how do those platforms help the average trader?

- Well, they help the average trader because you can start with smaller investments.

So you might be able to start with $10 a month or $15, whatever you can afford.

And you can start building that discipline so you can have it linked to your checking account to where it drafts out on a certain day of the month and you create that discipline where every month you're investing in something.

So even though you may not be buying a share of Nvidia, which is like $180 a share, you might be buying a fraction of it because that's another thing that's changed over the years is that you can buy fractional shares as opposed to in the older days, back 20, 30 years ago, you had to buy a full share of a stock.

And so it creates a level playing field, especially for African-Americans where we haven't really had that access to the stock market.

- I was gonna say, that was never really an option.

I mean, growing up, you heard about it, but it wasn't what we did.

And so when you're now sitting down with these young boys, teenagers, how is it being received?

And how do you think that this changes or shapes the future generations mindset around finance?

- Well, it's being received because I know every year we do the stock market game and it's heartwarming hearing the stories from the mentees about how they're actually investing in stocks and how they're making money.

But it's also, we're trying to teach an owner's mentality because so many of us have a consumer mentality that we wanna spend, spend, spend as soon as it comes in.

We're trying to teach them to have an owner's mentality.

So buying companies, you become an owner and we want them to take that and as they become older, think about owning their own companies.

- Nice.

Well, I love that.

And so you said it's about six months that you go through this with the boys?

- Well, it's a three month window.

And one of the things we're talking about doing because of the fact that this particular year, the stock market has not been the best three month period that they've had the game.

We're thinking about trying to expand it further so they can see how the market does in a longer period of time.

So, yeah.

- How has AI or technology influenced trading, if any at all?

- It's starting to influence because of the thought that it's gonna lower costs for companies.

And so if it lowers costs for companies, that means that they're gonna have higher profits.

And if that, they have higher profits and that should hopefully get their stock prices going up.

So the thought is that it's going to lower costs and increase efficiency and make more profits.

So for those who are invested, the thought is that you're gonna make more money over the long haul because that's the direction a lot of companies are doing.

- Okay.

Now, when we met before the show, you brought your book.

Right?

And so you're also a financial advisor.

- Yes.

- And so tell us a little bit about your book, "Map Your Financial Freedom" and what it's all about and why'd you write it?

- I wrote "Map Your Financial Freedom" because I wanted to give back to the community because I've made a lot of mistakes when I was in high school and college with money.

And so I talk about some of my stories about making bad choices with credit and not budgeting.

And so the book is broken down into a few sections.

One is on budgeting because that's the foundation of building that financial wealth.

Because if you don't know what you have coming in and going out, it's really hard to be able to build anything from that.

Also talk about managing credit responsibly because unfortunately growing up, I made poor choices and I was learning from my parents who they did the best they could, but they didn't know.

And so I followed some of those same cycles that they did.

Then I get into talking about insurance and things like that because that's also an important part of wealth building.

And the last part is talking about investing because we need to build wealth through investing.

And there are other ways, not just the stock market, but also real estate as well.

- Yeah, well great.

And folks can find it on Amazon if they wanna go check it out.

Awesome, well Patrick Lyons, thank you so much for being here.

- Thank you for having me.

- Thank you.

Well, part of the financial shift to investing begins with a mindset change.

For decades, black families passed down the idea that you must work hard and long to gain any kind of wealth.

But that thought is now being challenged.

Take a look at this clip from the Breakfast Club podcast.

- We've been taught in the black community.

- The greatest financial myth I think is that the harder you work, that's gonna lead to success.

And it's like, shout out to my bro, Wall Street Trap, he said something that was so profound to me.

It's like, coming from working class environments, we all know people that work two jobs.

Pretty common, right?

Even three jobs sometimes, overnight shifts.

And you really think about it, I never met one person that worked two jobs that had more money than somebody that worked one job.

I never met one person that worked two jobs that had money, they still broke.

And it's like, the reason is 'cause you're trading your time for money, and that's not really how to get money.

You gotta have your money work for you.

And that's really the greatest, greatest myth I think that we've been taught, is like, money doesn't grow on trees, you gotta work hard, but it's really crazy because it's like, nah, not really.

Your money has to work hard for you, 'cause the harder you work for money, you're just gonna be, burn yourself out, and you're still gonna be broke at the end of the day.

So I had a friend of mine, I'll never forget, and he was like, this was like 10 years ago, and he's older than me, but he was probably 30 at the time, and he was like, "I wish I would've been a firefighter."

And no disrespect, I love firefighters, or we come from blue class working environments, but the point is, I'm like, "Why you wanna be a firefighter?

"It's a dangerous job."

He's like, "Just do a quick 30 years, "you get your pension, you retire."

And I'm thinking to myself, "Quick 30, that's your life."

Like, you know what I'm saying?

But that's how we taught, just work a job just to get a pension, but it's like, it's so crazy, 'cause it's like, if you put $6,000 into a Roth IRA for your child at 14 years old, right, and let's say it grows 12%, by the time they're 60 at retirement, there'll be $1.1 million in it.

So you could literally make your child a millionaire with $6,000, and now people is literally trading their whole life to get a pension, to retire.

You could set your child up for $6,000 when they're 14, have 1.1 million, like, don't even worry about your retirement, it's already there.

Focus on what you wanna do in life.

How many of us gave up our whole dreams, our whole life, to have a pension, to have some security, and we still don't have security?

So for me, that's the greatest myth.

- Well, now we shift from understanding money to strategizing with it.

What should your money be doing for you now and in the future?

To answer that question is Ryan Ray, founder of Triangle Entrepreneurship.

He helps individuals think strategically about how their money works for them.

Welcome, friends.

- Thank you so much for having me.

- Of course, so we just watched that clip, right?

You talk about mindset shifting all the time, and with Patrick, what he was sharing with his book and the lessons he's learned, it hasn't been something generationally that our black communities have thought about investing in generational wealth.

So let's start with mindset shift, 'cause that's a big piece of this.

How do we shift the mind?

- Yeah, I think we shift the mind by, first, we have to pause and think long-term about what it is that we want to accomplish.

As you just heard in the clip, a quick 30 years, right?

And the challenge is, as Mr.

Lyons said, we're consumers.

So we spend that 30 years that we're working also as consumers.

So we haven't saved, we haven't invested.

So the mindset shift is to say, okay, let me look down the road 30 years and think about what I should have done today, and then begin implementing that.

And so if we begin to think legacy, if we begin to think lifestyle, everybody wants to live to get old, but nobody's planning to.

So if we start thinking down the road, it would then shift our behaviors today.

But that mindset has to think, we're just pausing and saying, 'cause you gotta pay the price one or two ways.

You're gonna pay it now, or you're gonna pay it later.

And most of us pay it later because we're enjoying the fruits of our labor today, and we've put nothing away for tomorrow.

So when we get down there, it's like, now what?

- Now what?

I don't know if this is just my kids and their friends' mindset, but a lot of the younger mindset is, I'll worry about tomorrow tomorrow, 'cause they're living in the now.

But I love what he's doing with those young boys because it's shifting that mindset.

You talk about three key rules of money.

What are those three key rules of money?

- Yeah, I love this.

So the first one is compound interest.

And again, we talk about consumerism.

For most of us, compound interest is working against us in the form of debt.

So when you get a credit card and you're paying that, I think it should be illegal, 22% interest on it.

That's compound interest working against you, but for the company.

But if we can take compound interest to work for us, so the formula is, if you want to double your money, this is the rule of 72.

You take 72, and you divide it by the interest rate that you're getting on your money.

So quick example, if you're getting 1% of your money in a traditional bank, then it's gonna take 72 years to double your money.

You got a dollar in the bank at 1%, it's gonna take 72 years, will become $2.

So that's compound interest.

The challenge with that is, this thing that's fighting against our compound interest is inflation.

A house in 1970, $23,000.

Just a quick 20 years later, that house price has doubled twice, from 50 to now 100, $125,000 in 1990.

What are house prices today?

Another generation later, 4 1/4.

And so you've gotta have your money working harder to outpace this monster called inflation.

If we keep it that same path, another 20 years from now, homes are $1.5 million, imagine that.

So that's number one.

The second rule is, what are your growth options for your money?

Is it fixed?

Is it in one of those banks that's getting probably not even 1%, right?

You could put it in a high yield savings account and maybe get three to four.

Still rather fixed, it's not outrunning inflation.

Then there's the variable market, right?

So we're talking about the stock market, where you're gonna experience the high, you experience the growth based on current affairs, your money's gonna go up.

You know, something could happen politically, stock goes down, company makes a great decision, goes back up, CEO does something crazy, goes back down, right?

So that's variable.

And then there's indexed, which is where we typically live in the financial services space, in the insurance space.

And that's where we could put floors on your money.

So you could take advantage of the growth in the stock market, but we can kinda put a floor or a lock on your money, and so when the stock market dips, that doesn't influence your money, but the next time it grows, you get to take advantage of that.

And then rule number three is how are you taxed, right?

Which is a big one that we don't think about.

The average American is taxed anywhere to a third to half of their income.

And it's nearly impossible to build wealth if you're giving away a third to a half of your money.

So there's tax now on cash, you know, you sell a stock, you're gonna pay tax on it now.

And then there's tax later, or deferred.

And typically we get confused there, right?

We say, okay, wow, I can pay into a 401(k) or a 401(b) government program, by the government, for the government.

So they're gonna let you pay in tax-free now, but guess what?

They're gonna get their money later, right?

So that's tax later.

And then there's what we call tax never.

And again, if you're able to leverage some of these insurance models and products, fixed index annuities, universal index, Roths that we heard about earlier, you can literally, if you stay like for like when you move your money, you can literally pull that money out, withdraw it, or take a loan on it without any tax penalty.

- So let's dig in there.

We heard stocks and trading and investment.

Let's talk, as you said, fixed variable.

- Yeah, so fixed index annuities.

- Fixed index annuities.

I'm learning new vocabulary words today.

So explain to us what that looks like real time.

How do we get into it?

How much do we need?

- No, so it's simple.

So real life example.

My niece, she worked really hard to get her nursing degree.

She just graduated this last semester.

Shout out to the Broncos, Fayetteville State.

And she worked for Caterpillar, a company there in Fayetteville where she went to school.

She was able to stack about $30,000 into a 401k while she was working.

Well now, she's employed with Moses Cone Hospital over in Greensboro, right?

But now she has money sitting in at former employers 401k plan.

And we often joke and say that's like having money in an ex's bank account, right?

You don't want it there.

You gotta get it out of there.

So we're gonna take that, roll it over into a traditional IRA for her, which will be in a fixed annuity account.

And then I'm gonna encourage her to contribute about $100 a month to that.

Well, by the time she retires, that will very easily have been guaranteed over $250,000.

- At $100 a month.

Now if it gets 12, 14%, again, like we heard in the clip, which is very possible, she'll very more than likely be a millionaire by the time she retires.

- Now what if I don't have $30,000 to start it?

- Same thing.

So you can take that either fixed indexed annuity or what we call an indexed universal life policy.

Same thing, $50, $100 a month, you can put into these programs or into these policies and you're gonna get the protection of the death benefit.

So now you get to have someone to inherit that at your death, right?

But then also you're gonna be able to take advantage of the growth of the market, you're making this investment over time.

What I love about that is that now you get to borrow, it's like being your own bank, right?

You get to go out and borrow that money from yourself.

So you put that $50, $100 in there for years and decide you wanna pull it out for your daughter's down payment on her home, or you wanna pay for the wedding or something, right?

Now you can pull that money out and borrow against that policy and there's no tax burden to you.

- How quickly does the funds accumulate though, like the profit accumulate?

- Yeah, so great question.

So again, time, right?

You know, Warren Buffett, one of the greatest investors of all time, he said that, you know, time, over time is better than the right time, right?

A lot of times we think about investment, it's like, oh, what's this newest thing that's coming out?

Right, I mean, time the market.

Well, if the timing is never right and you never get in, there's no benefit.

But if you get in early and play the long game, again, as Mr.

Lyons said, that's a long game, then that benefit can be tremendous on the upside.

And so again, I think that goes back to mindset and what is it that you're really trying to accomplish?

And then of course, how much you're investing over that length of time.

- I think part of it has to be that you've got to compartmentalize today's financial stress with the stress you want to alleviate later on.

'Cause I think a lot of people feel, well, I've got real time things happening today, but most of us could put away $50 to $100.

- It goes back to short-term gratification versus long-term gratification.

It comes back to, you know, do you want to leave an inheritance for your children's children?

You know, if you believe in the Bible, as what it says, or do you want to eat all the fruit of your labor today?

- Right.

- Right, you know, in my work with entrepreneurs, I talk a lot about at some point, your productive capacity, your ability to go out into the market and produce, whether it be for time, whether it be for a skill set, whether it be for your knowledge, is gonna come to an end, right?

Your health, the market's gonna change, your business is no longer valid.

So you have to begin to prepare for when you're no longer, not if, when you're no longer able to produce at the capacity you are today.

And most people can scale down their lifestyle, and that's the other piece too.

We always try to make more, make more, make more.

Well, where can you save?

Where are you wasting?

Where are you not being a good steward of what you have that you can now take that and invest?

- Well, where can folks call you, find you, get some advice?

- Yeah, absolutely.

So you can find me across all social media at Ryan Ray Official.

You can email me directly at Ryan@rrofinancial.com.

And so, yeah, I'm out there.

- Awesome, well, thank you, Ryan Ray.

Appreciate it.

- My pleasure, absolutely.

- And I thank you for watching.

If you want more content like this, we invite you to engage with us on Instagram using the hashtag #BlackIssuesForum.

You can also find our full episodes on pbsnc.org/blackissuesforum and on the PBS Video app.

I'm Kenia Thompson, I'll see you next time.

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