How Culture Impacts Investing Habits
Too often, investing is an uncomfortable topic in different cultures. Alternatively, investing may not be “uncomfortable” - but there may be very specific cultural investing preferences when it comes to where and how you’re expected to invest your money.
For example, in the African American culture, real estate is a commonly used investing vehicle, while more traditional investment accounts aren’t always considered as a primary savings tool. It has been shared that in the Islamic culture, all forms of interest are considered “riba” - which is forbidden under Sharia Law. This can make investing and saving incredibly challenging.
Every culture has their own views on investing, earning interest, and what constitutes a “safe” investment. While these idiosyncrasies can be challenging for others to understand, they may be incredibly important to you as you start your investing journey. The key is determining what cultural investing ideas are positively serving you, and which of them you may need to let go in order to find success in your own life.
How Did Your Community Teach You to Invest?
In many cultures, investing isn’t commonly discussed with children in a household. To some extent, this makes sense; not all children are ready to understand this concept, or even the process of working toward bigger financial goals - like retirement or owning a home. However, some people have been sheltered from investing to the point that it causes them anxiety when it’s time to start investing and saving as adults.
Your comfortability with investing, and your ability to plan out a savings strategy, largely comes from the model you were shown growing up. If your parents or the adults in your community weren’t comfortable discussing their investing strategy with you - you may feel uncomfortable trying to create your own plan now. You might also find that the ways your parents and community traditionally invested are the only tools you’re willing to consider.
While staying in your cultural comfort zone when it comes to investing can be valuable, there are times when it won’t serve you. Taking the example above, where many individuals in the African American community focus on real estate, we can see this concept in action. For many, investing in real estate makes sense financially, and for their lifestyle. Having rental income as part of your long-term financial plan can be hugely beneficial, and move you toward your big-picture goals.
However, this isn’t always the case. Real estate is far from a rock-solid investment. Like any investment, the market will have up days and down days. Your property may grow in worth, or it may plummet as the area you bought in grows and changes. Adding the responsibilities, expenses, and time commitment of being a landlord into the mix - and real estate investing starts to look more and more complicated.
If you’re a young professional, you may not have time to maintain an investment property - even if you grew up with your parents and community telling you it was the “safest” way to invest. You have to build a strategy that fits your unique lifestyle, and you can do that by both respecting the knowledge that was passed down through your culture, while still setting your own boundaries around how and when you’ll invest for your unique goals and dreams.
How to Get Comfortable With Investing in Your Own Life
If you aren’t comfortable investing, you’re not alone. Many young professionals feel confident in saving - but when it comes to investing their savings? Cultural background, and a general lack of certainty often prevents them from leveraging their cash savings to enter the market and expand their portfolio.
The good news is there are several ways you can start growing more comfortable with the idea of investing in your own life. Follow these actionable tips to get started:
Do your research. If investing makes you nervous, start by reading an article, watching a video, or reading a book to understand some of the basics. More into podcasts? Check out Paychecks & Balances and Beyond the Dollar as a starting point to begin increasing comfortability with all things financial.
Talk to your community. Look within your community and outside of it. Who is investing confidently? Don’t be intimidated to start conversations with people to see how they got started investing, and be open to all of the options you’re presented with.
Think about your goals. Investing for the sake of investing is a recipe for confusion and stress. Instead, start by thinking about what you want investing to achieve for you personally. What goals do you have that investing can help you to reach?
Partner with a pro. Reach out to a trusted, fee-only Certified Financial Planner (CFP®) professional to learn more. Remember: you never have to go it alone!