The Feminine money Mystique.

The secret's out: women can create and manage lasting wealth

TRACIE HOWARD TAUGHT HERSELF ONLINE TRADING. Howard, a former director of sales for American Express, started from scratch with zero knowledge of the stock market. "Trading used to seem like an exclusive boys' club," says

"I always had money in my 401(k), but that felt remote," says Howard, an unmarried writer who has a three-book deal with Penguin Books, the first of which is Revenge Is Best Served Cold (co-written with Danita Carter). So she pulled her money out of the plan, and--along with some funds from an investment property in Atlanta that she recently sold at a significant profit-became an active trader. At 38, she has finally developed a "personal relationship" with her money. "I feel so much more independent than in the past, and more unafraid of getting into financial information."

More and more women are on the same track as Howard, and the progress has been steady. According to OppenheimerFunds, women earn $1 trillion annually, and the National Association of Securities Dealers reports that 47% of all investors in the U.S. are female. Sixty-seven percent of the members of the National Association of Investors Corp. are women, and 54% of its investment clubs are women-only. The average individual member's portfolio is valued at $243,666, and the lifetime annual earnings rate of female clubs is 32.1% for 1999 (up from 17.9% for 1997). That's an almost 9% advantage over male clubs' earnings, which gained 23.2% in 1999. In fact, statistic after statistic heralds the fact that women are taking the financial driver's seat (see "Battle of the Sexes").

But it's also been a slow road to financial independence, with more work to do. According to an Oppenheimer survey, although women now wield formidable earning power, they still earn 75% of the dollars earned by men, and of the elderly poor, 75% are female. Many women are still unfamiliar with even basic investing principles (45% of those surveyed didn't know the meaning of dollar-cost averaging). And women remain less prepared for their financial futures than men--even though they will outlive them by an average of seven years--because they not only start to save later, they also save less.

African American women have to navigate an even greater divide. Only 48% of black women surveyed by the Employee Benefits Research Institute of Washington, D.C., have saved for retirement vs. 70% of all women surveyed. The 1999 Ariel-Schwab Black Investor Survey reports that in every category of investment product--including IRAs, mutual funds and brokerage, and money market accounts--black women were last in terms of ownership. When asked about their top reasons for not investing in the stock market, female respondents to BLACK ENTERPRISE'S Financial Survey cited feeling that they don't have adequate funds to invest (59.2%); fear of losing money (25.4%); and lack of access to financial advisors (16.9%).

GETTING PAST THE HURDLES What prevents women from developing that "personal relationship" with their finances that took Howard so long to cultivate?

"Unfortunately, even though we've come a long way, many women are still having trouble managing their money," says Cheryl Broussard, a principal with Cheryl Broussard & Co., Oakland, California, and author of The Black Woman's Guide to Financial Independence (Viking Penguin, $15.95). "As much as I don't want to admit this, many are Still waiting for Prince Charming--even the professional women who are pulling in five and six figures. We still want to be rescued financially."

Financial planner Brooke Stephens, a former Wall Street veteran and author of Wealth Happens One Day at a Time (Harper Business, $21), agrees. "Generally speaking, we get a head trip laid on us about ourselves, that we don't have to get serious [financially] until we get married. Well, you know what? He might not show up. Or he comes, but then leaves you with three kids and not enough money."

However, Stephens says there's a generational split to this thinking. "Women 32, even 30 and under, they're saying, `I'm going to go out and do my thing'--and they're making enough that they don't have to wait."

Broussard and Stephens also point to the consumer habits particular to African American women that act as barriers to their building long-term wealth. "We spend 61% more than white women on things like clothes, hair and manicures," says Stephens. "We say, `I deserve it.' What you deserve is a secure financial future."

"The last time I checked, black women made 69 cents for every $1 a white male made," notes Broussard. "With this disparity, women have less money from the get-go, so we cannot afford the luxury of overspending."

To address this hurdle, look closely at what you spend your money on, and how you can reallocate it to begin wiping out credit card and other short-term debt. "If you don't have the cash, don't buy it," says Broussard. "Cash is queen today. As long as money is going every month to pay off credit card debt, there will be nothing left over to save or put into investments--areas where your money will grow." Ready to take the first step to financial freedom? You can start by signing B.E.'s Declaration of Financial Empowerment and consulting the Wealth-Building Guide (available from 877-WEALTHY or www.black enterprise.com) Your next charge: learning how to be your own money manager.

FINANCIAL ED 101

Being proactive in your financial education means not waiting for a crisis such as divorce or death to force you to take the financial reins. Regardless of whether you're single or married, the goal is to save enough money for retirement and still enjoy life along the way.

Camille Hackney, 30, knows that honing her money-management skills is an ongoing process. Hackney, who is vice president of multimedia and business development at Elektra records, is also a self-taught online trader. "I went to Harvard Business School and worked at Merrill Lynch before I came to Elektra," she says, "so the market was never anything that scared me." Even so, Hackney continues to read up on and study the market. "I'm heavy in technology now, because that's what I know."

Whether or not you have prior experience, investment companies are taking a strong interest in cultivating women investors. All you have to do is tap into the myriad offerings. For example, Oppenheimer's Women & Investing kit (800-525-7048; www.oppenheimer funds.com) provides an overview of the basics, what it takes to get started, a worksheet and resources for finding a financial advisor. The African American Women on Tour program, now in its 10th year, offers a variety of seminars on financial empowerment in six major cities annually (for more information, see www.aawot.com). And the national Girls, Women & Money Conference, sponsored by the National Coalition of Girls' Schools, will be held this September and offers a variety of seminars on five different tracks of financial programming (see www.edupr.com).

Prefer logging on to learn? A new Website, the Women's Financial Network (www.wfu .com), is the first network of financial advisors for women. A Website for women, iVillage.com, offers a MoneyLife area that breaks out the financial stages of life and offers a variety of articles and tools to help you plan yours. At www.brookestephens.com, you can sign up for daily e-mail advice on investing with less than $1,000, credit and debt, and buying a home.

Of course, there are also plenty of offline resources, such as the business sections of the Wall Street Journal and The New York Times, as well as financial coverage on programs aired on CNBC and CNN.

Tracie Howard used investment sites such as www.raging bull.com, www.edgaronline .com and www.cnbc.com to bring her financial skills up to speed. In addition, she followed TheStreet.com's Investment Challenge, a stock-picking portfolio contest. The challenge required participants to manage a fantasy portfolio that started with $500,000.

Do you prefer the group experience? Try going to investment seminars or joining an investment club, suggests Broussard. "We aren't raised to take risk," she says. "We want safety and security. To overcome this I encourage women to join or start investment clubs. This way they can learn to invest without risking large amounts of money, and they're educating themselves at the same time." For more on investment clubs, log on to NAIC's site at www.better investing.org, or read The Millionaire's Club by BE Contributing Editor Carolyn Brown (John Wiley & Sons, $19.95)

MAKE A PLAN

Besides adequately funding your golden years, do you have your sights set on a house, college or a retirement home? "Start by sitting down and writing out your financial goals," says Broussard.

Mapping out a plan also means determining whether or not you want to work with a financial planner--a traditional area of resistance for women investors. According to the Ariel-Schwab survey, 41% of black female respondents thought stockbrokers and financial advisors are more interested in making money for themselves than giving good advice. And according to the National Center for Women and Retirement Research in Southampton, New York, less than 4% of women of color--including black Hispanic, Asian and Indian women--between the ages of 35 and 55, with incomes between $25,000 and $35,000, use a financial planner.

But there are advantages to enlisting the help of an expert, especially in terms of planning ahead for major financial events. Laura Poynter found this out when she was forced to empty her 401(k) account to scrape up the down payment for her co-op apartment in New York. At 34, she was tired of renting and wanted to buy a home for herself and her four-year-old daughter, Aillanna Eyssallenne. "I didn't have an emergency fund, and in terms of savings, I'm basically living hand to mouth. I'm back to ground zero."

The good news is that Poynter has no other debt outside of her impending mortgage. As a first-time homebuyer, she's excused from the 10% penalty on any 401(k) withdrawal not taken during retirement. In addition, real estate could provide a handsome return in the future.

"Women must buy their own homes or invest in some type of property," says Broussard. She cites studies of the differences in net worth in black ($4,000) vs. white ($40,000) households, "because of the lack of property in black households. Having your own home is a form of wealth building."

There are a number of ways you can find a reputable planner. (Start by taking a look at "The Right Stuff" in the May 1999 issue of BE). Aside from www.wfn.com, which helps you access female advisors, the Website of the National Association of Personal Financial Advisors (www.napfa.org) will help you find a fee-only financial planner or CPA near you. In conjunction with Dalbar, a Boston-based financial research firm, MSN Money Central's advisor finder at www.therightadvisor.com lets you search for a planner by location and portfolio range. In addition, the Certified Financial Planners Board of Standards' site at www.cfp-board.org lists planners by category, such as "Financial Planning for Women" and "Financial Planning for Low Income Clients." In the Press section, click on "Media Sources" for a complete list.

Not quite sure if you want to put your financial life in someone else's hands? Howard has split the difference by investing 50% of her money in stocks she picks on her own and actively manages online. The other 50% is managed by Charles Schwab investors, who have set aside a portion of Howard's money for her retirement and put the rest in a cash management fund "to simulate a salary" while Howard is getting her writing career off the ground.

If you're definitely a do-it-yourselfer, there are plenty of cyber tools to help you create your own financial plan. For instance, www.financecenter .com has a smorgasbord of savings calculators and budgeting tools to help you estimate your needs for everything from buying a car to planning for retirement. Vanguard's Website at www. vanguard.com/educ/inveduc .html offers a variety of free tools as well. If you feel you need more guidance, you can use one of the four interactive investment modules at www.van guard.com/planning center/ software/software.html.

GET STARTED: PAY YOURSELF FIRST

Now that you've clicked, read and researched your way to a plan, it's time to put it into action. This is where you'll have to adopt an aggressive approach, because the biggest problem that many women face in retirement is not having saved enough.

In fact, African American investors, and particularly black women, tend to subscribe to what Michael DeFlorimonte, who heads Schwab's African American Marketing Initiative, terms a "culture of conservatism": 44% of blacks in the Ariel-Schwab survey keep most of their assets in bank accounts. According to Stephens, it's a mistrust of Wall Street that leads many African American women to put their money in these low-interest, federally insured accounts.

The solution? "Begin [investing] at least 10% to 15% of your monthly income," says Broussard. "Pay yourself first is the answer. Have the money automatically deducted from your paycheck to make it pain-free."

A good place to start is with your company's 401(k) plan. Hackney is "aggressively maxing it out" as one of the main components of her retirement portfolio. For 2000, you can contribute up to $10,500 in pretax dollars, so take advantage of it.

If you don't have a 401(k) at work, then consider opening an IRA (individual retirement account). The annual contribution is limited to only $2,000, but at least it's pretax, so you get a deduction for it on your tax return. Or you may opt for a Roth IRA, which offers no tax deduction but your money isn't taxed when you withdraw the funds (see "When Your 401(k) Isn't Enough" in this issue).

Outside of these structured plans, you can get the investment ball rolling for as little as $25 a month, which can be automatically deducted from your checking account. Sounds like peanuts? According to Oppenheimer, if you began with an initial investment of $1,000 and a fixed rate of return of 8%, after 30 years, with monthly $25 contributions, the $1,000 would grow to a hefty $45,276; without additional fund's, the $1,000 would grow to $10,063.

In fact, you can invest in most Oppenheimer funds for only $25 a month after getting in with a $1,000 minimum initial investment. The Capital Income fund, for example, sports a solid 15.02% five-year average annualized return.

TIAA-CREF, the mega pension and annuity company, will let you into one of its six funds for $25 a month (as long as you sign up for an Automatic Investment plan; without it, the minimum initial invest is $250). The Growth Equity Fund (TIGEX) has returned 32.5% over the last year, while its benchmark, the S&P 500, has only returned 22.8%, according to Chicago-based fund tracker Morningstar. Major fund provider T. Rowe Price will also let you in to any fund in its family if you commit to a $50 automatic withdrawal from your bank account. However you have to do it, just "get started with a couple of mutual funds," says Stephens. "Whether it's growth, international or conservative blue-chip." Stephens' top fund-family picks are Janus, Strong, American Century and Fremont.

Two other means of low-cost entry into the market are direct investing and Dividend Reinvestment Plans. Direct investing lets you bypass the stock broker and buy shares directly from a company, often through monthly deductions from your bank account. For a searchable database of over 1,600 direct investment plans that also let you purchase online, check out the Netstock Direct program on www.blackenterprise.com.

DRIPs also let you purchase shares (even fractional shares) of company stock at low minimum initial requirements. With DRIPs, the dividends you receive are automatically reinvested in more shares. This gives you the advantage of dollar-cost averaging, which lets you purchase more shares when a stock's price is lower and fewer when it's higher, smoothing out the average cost. For more on DRIPs, see www.dripinvestor.com.

Once you've started to put your money to work for your future, you can fine-tune other aspects of your finances. For more guidance on crafting an overall money-management plan, see "All-Purpose Tips for All Women Investors" on www.blackenterprise.com.

Women are taking control of their financial lives in a big way and will continue to make even greater strides, says Stephens, if they stay focused on the right priorities. "You don't want to just be a senior citizen," she says. "You want to be a 92-year-old lady with a financially secure future that you made for yourself."

RELATED ARTICLE: Battle of the Sexes: Female vs. Male Investors

Women 43%

Men 76%

43% of women are more likely to rely on friends and family for financial advice vs. men, 76% of whom are more likely to rely on personal research. (National Center for Women and Retirement Research)

Women 62.5%

Men 50.6%

62.5% of women started investing through their company's 401(k) plan vs. 50.6% of men. (BE Financial Survey)

Women 71.5%

Men 84.5%

84.6% of men have been in the stock market for 20 years or longer vs. 71.5% of women. (BE Financial Survey)

Women +1.4%

Men

Single Women +2.3%

Single Men

From 1991 to 1997, women's portfolios on average earned 1.4% more than men's. Single women did even better, earning 2.3% more a year than single men. (University of California at Davis)

* Women tend to trade stocks less frequently than men, thus following a more long-term investment philosophy and incurring fewer commission costs. (University of California at Davis)

* Women investors tend to conduct thorough research; don't act on emotion or stock tips; invest consistently; have the patience to ride out share-price ups and downs; are more socially responsible investors; and typically purchase shares in well-known consumer companies. (National Association of Investors Corp.)

--Additional reporting by Christine Verdi