EP67 Overcoming Fear of Investing in the Latino Community to Achieve Financial Freedom

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What if the fear of taking risks is the very thing holding us back from the financial freedom we dream of? Join me as I confront this fear head-on, inspired by personal experiences within the Latino community where financial stability has traditionally been prized above all else. Growing up, many of us were taught to sidestep debt and prioritize safe, predictable livelihoods. Yet, these well-intentioned lessons might be stifling our potential for wealth-building. Through my own journey of navigating calculated risks, I've discovered how reframing failure as a stepping stone rather than a setback can unlock new opportunities, particularly in realms like real estate investment.

Let's challenge the conventions that keep us tethered to financial limitations and explore practical strategies for embracing risk in a way that is informed and purposeful. I share stories of early missteps and valuable lessons learned, underscoring the importance of understanding your "why" to propel you forward. Whether it's investing in rental properties or launching a new venture, taking informed risks can pave the way for generational wealth and help close the racial wealth gap. By reflecting on personal barriers and sharing collective insights, we stand to break cycles of financial instability and create lasting legacies for our community. Join the conversation and be part of the change.

Chapters

• 0:00 Overcoming the Fear of Risk
• 1:07 Why Overcome Fear of Risk
• 2:35 Why Latinos Fear Risk
• 5:36 Avoiding Financial Risk Puts Latinos More at Risk
• 6:55 Reckless Risk vs Calculated Risk
• 10:23 Build Your Knowledge to Reduce Risk
• 12:03 Start with Small Risks
• 13:04 Surround Yourself with Risk Takers
• 13:47 Learn How to Invest in Rental Property
• 14:49 Building Wealth Through Calculated Risks
• 14:50 Reframe Failure as Learning Opportunity
• 16:43 Have a Strong Why
• 19:27 Breaking Through Fear of Risk

Transcript

Speaker 1: 0:00

Taking a risk. It sounds scary, verdad? You know, the word risk is a very negative word in the Latino community and, honestly, I have seen how the idea of risk has stopped, you know, people in the Latino community from investing in stocks and real estate in the Latino community, from investing in stocks and real estate. But let me tell you, we have to learn how to overcome this fear of the idea of risk in order to build wealth. So let's talk about how we can overcome this idea of risk in order to get out there and start investing and start building financial freedom and wealth. But first, hola hola, welcome to Money Chisme. I am Violeta and here we get the chisme on personal finance, real estate investing, investing in general and entrepreneurship, and we also share the stories of other wealth builders in our community. Now, this fear of risk is a huge barrier in the Latino community when it comes to building wealth and you know, just out here, trying to gain financial freedom like fear is, you know, obviously sometimes good in certain situations, because it can give you that caution to help you avoid big failures in life, losing money, of course, but at the end of the day, risk is required to build wealth. The key thing is that we need to learn how to take calculated risks and we have to learn how to overcome that fear. Y la verdad, like I had to learn how to do that. I had to learn how to quiet that voice, a little bit of this anxiety, of this fear that you know I'm going to lose all my money. And you know, even to this day, I am constantly battling with that emotion and that fear. Even with my most recent deal that I am closing on, like I still had that anxiety and that fear come up like what if? What if, what if something bad happens or whatever. But I had to talk to myself and, you know, learn to trust myself as well and have that confidence that I crunched the numbers and that I did all my research, I did my due diligence. So let's talk about where this fear is coming from.

Speaker 1: 2:41

You know, many of us grew up in families where financial stability was needed for survival, and, especially if you're first gen like me, our parents came here into a new country. They didn't know how the economics works or anything. All they knew was that they had to work to make money so they could make, you know, pay the bills and provide for us. And so that's all they knew. They knew to work and make money. And with that, the mindset quickly settled into playing it safe. And because they don't know what they don't know right, they don't know how to invest or what stocks are or how you know money works in this new country.

Speaker 1: 3:33

And so they played it safe of you know working hard, uh, paying your bills, making sure you don't get into debt, going to school, and getting you know a good job that you know pays you. And getting you know a good job that you know pays you. Well, maybe has you know some benefits that's a plus, but ideally you get a good paying job and you know, eventually buy your first house and then settle down and basically save every penny that you can for retirement On top of that, like we saw our, our parents or our grandparents, uh, we saw how hard they worked and how much they sacrificed, uh, to be here and to provide for us. So we're like you know what? I do not want to do anything that's going to fuck that up. And so then we follow the advice that they they give us of you know making sure that we just get a good job and protect the little that we have because they didn't have the privilege to take risks, because you know the stakes were too high. If they failed, it was, you know that was it Like the whole family could be out, you know, homeless or something. And so the little financial education that we do get from you know our family is things like you know, just save and don't do anything that's too risky.

Speaker 1: 5:02

I still hear that, you know to this day. My mom will say, like you know, like you know you're gonna, that's too much risk. Like how are you going to pay for these houses? And like she doesn't understand that, uh, that I have cashflow for that and I'm making profit on top of the house being paid off and you know other things that I do to reduce my risk. And that advice comes from a place of love and what they know and what worked for them.

Speaker 1: 5:36

But that fear and that type of advice is actually starting to hold us back now that we are in today's economy and now that we're realizing that you know what saving is not going to be enough for retirement, especially with inflation, and that job can you could get laid off tomorrow. So in reality, not taking these calculated risks to invest is actually hurting us and actually putting us more in risk of, you know, financial ruin, because we're putting our eggs all in one basket. We are putting our money into a bank account, saving it and not taking account of inflation, and putting all our faith in this job that tomorrow they can decide that you know what, we don't need your position anymore, or you know what you need to take a pay cut. Or you know that promotion that you thought you would get. You're not getting it. Or when you first get out of college, you think you're going to get a high paying job and they're like actually no, you're going to get an entry level position because you don't have any experience or whatever. So you're going to get, you know, minimum wage or whatever. And then you're like what? So let's talk about risk, like let's get into it and start understanding and overcoming this fear.

Speaker 1: 7:03

A lot of times when people talk about risk, immediately people think it's like gambling away your money because it's kind of difficult for when you are not as financially literate, especially like in stocks and investing and like real estate you can imagine how scary that is of thinking that, okay, I'm going to put my money into this stock or the stock market and you know what. I saw the stock market crash, you know, a few years ago. Or what about the 2008? You know crash and things like that. So it can be scary, but there is a very clear difference in reckless risk versus calculated risk. With calculated risk, you are getting all the information possible. You're researching're crunching numbers, you're thinking of the what ifs and having backups and ways to get out and make sure that, if it doesn't go as planned, reduce the the impact.

Speaker 1: 8:19

So, for example, I invest in real estate and rental property. Investing can be scary. I hear it all the time that what if I get a bad deal? What if the, the property that I buy actually has, uh, hidden mold, like black mold, or it has termites inside? Or what if the tenant doesn't pay? Or blah, blah, blah. You know all these what ifs and it can sound scary and so a lot of people do not get into.

Speaker 1: 8:50

You know investing in rental properties and let me tell you, as someone that has gone through, you know tenants not paying to where? To the point where I had to evict them. I had a tenant, you know, not necessarily like trash the house, but it was not well taken care of. They're like the kid wrote, drew on the walls and all and, uh, some maintenance issues. Uh, they left some like leaves which you know ended up, you know, rotting the deck and everything like that. So all of that was definitely stressful and from the outside, looking in, that could deter somebody because you're like, see, like now you had this maintenance and all that stuff, but I had a plan for those things and I had ways to cover that, to keep me afloat, to get get back on track which I am currently getting back on track and all the units are rented out, everyone's paying on time, and now I'm closing on another one. But it's because I analyzed my risk and I took action and set up a plan to if something does go wrong, I am good.

Speaker 1: 10:00

So I want you to start shifting your mindset of, you know, risk being this scary thing and seeing it more as a tool and using it to your advantage. All right, so how can we break through this fear of risk? Number one is educate yourself on, you know, whatever it is that you want to take a risk on. So let's say you want to invest in the stock market. You know, learn about the stock market, learn what a stock is and how it works, and figure out the different types of stocks and even look into that stock market crash and what happened, and look at it as a long-term thing, because stocks and real estate investing are a long-term game. And so you end up with overall, because you're going to have times where the stock market is freaking, rising crazy and you're making money. And then you might have, uh, times where the stock market is, you know, freaking, rising crazy and you're making money. And then you know you might have like a recession for a few years and it might dip and everything. And then you go back up but, uh, overall you are still gaining versus if you had just put that into a savings account. So, understanding the thing that you want to invest in, start educating yourself.

Speaker 1: 11:28

There's a lot of free resources, like this podcast. There's books that you can. You don't even need to buy. You could just go to the library and rent out some of the books. Check out some of those books. And there's YouTube. Be careful with some of the people that you follow and listen to in regards, because during 2020, there was a lot of stock bros going rampant and a lot of people fell, you know, prey to that of buying individual stocks. You always want to kind of diversify.

Speaker 1: 12:03

Number two start small. If you really do have that huge fear, just start something small. Start a little small investment account. You know, one of the ones that, like, I like to use is index funds, which is just like a basket of stocks, so it's like you're not buying one individual stock, you're buying portions of stocks, like fractions of stocks in a basket. So that way it is diversified and if one stock goes up or goes down, you have all these other stocks to you. Know, that way you don't lose all your money and start off small, like you know 50 bucks, 100, whatever you uh feel that you can afford to um risk and then eventually that's going to start helping you build that confidence of taking risk.

Speaker 1: 13:03

Number three is surround yourself with risk takers. Now, you know, obviously don't surround yourself with the one. That's just like gambling. Again, you know, surround yourself with calculated risk risk takers, people that can be that support group, like they say. You know, your network is your net worth, because it's true, and y'all work together and bring each other up and learn from each other and motivate each other. Remember that risk is part of the process and you don't have to do your properties to learning how to find your market and find and analyze your properties to make sure that you not only reduced your risk but also have a plan, a five-year plan, to have a roadmap to not only buy your first rental property but also serve as a guide for the next few years and give you a step-by-step on what to do next. If you're interested, if you are ready to overcome your fear of risk and get out there and start investing in rental properties, check it out. The link is down below.

Speaker 1: 14:49

Number four is reframing the idea of failure, because failure is not necessarily the end. You know, I failed at several things with my rental properties and some of my properties that I, you know, sold. You know, in hindsight I wish I would've known so, like my first home that, like now, I was like man I. That would have been a great property to continue to have. You know, it had a low interest rate, it had a low mortgage, it was in a great area and the rent was more than enough to cover and provide great cash flow. But because of fear at that time, I ended up just like selling it and giving up because I dealt with a tenant that cost me about seven grand, but the house was worth way more than seven grand and I would have made that, you know, in cash flow back easily. You know I don't see that as a failure, it's more of a learning experience. So now I learned from that experience, the mistakes that I did, and now I put them into the properties that I buy now. And same thing with you with some of my duplexes. I did some failures there with not doing enough due diligence, not knowing what to look for in some of these things, to where then I had to replace, like water heater and stuff like that. Instead of seeing it as a failure, it is a learning experience because at the end of the day, uh, the cash flow was enough to cover most of those costs. So it's not really a lot out of pocket that I was putting out to fix these maintenance issues and in the long run, the cash flow is what I'm after.

Speaker 1: 16:45

And lastly, understand your why. If you don't have a why, definitely take the time to figure that out, because that's going to be your guide. This is what's going to be your compass of making sure that you are taking the appropriate risk and the right type of investment, and it's going to be the thing that motivates you. And when you do have a you know setback not a failure, a setback it's going to be something to motivate you, to get you back on, you know, on the horse, I guess, and it's going to help you overcome that fear because you're going to realize the benefit of, you know, paying for your kid's college, of having the financial freedom to, you know, stay at home and raise your kids, or financial freedom to travel, see the world, or just to provide, maybe retire, your parents or, you know, just have extra cash just for funsies, like you know, your why is going to motivate you.

Speaker 1: 17:53

And so our Latino community has to learn how to overcome this fear and anxiety of taking risks and learn how to take calculated risk and in order to, you know, not just you know gain financial stability but financial freedom and build generational wealth that we are so far behind on, because taking these calculated risks far behind on, because taking these calculated risks, like you're creating opportunities for your family, you're breaking the cycles of of struggle or financial instability, and you know, you know money is power. We need, you know, our community to start building well so we could start using that to make change and build up our communities, and that's what I want to see. I want to see more of my Latino community out here investing in real estate, owning properties, starting businesses and just investing in their future, and in order for us to start closing this racial wealth gap, but also, you know, leaving a legacy. But we cannot do that if we continue to let fear consume us and be another barrier on top of the other barriers that we already have. So let's get out there and start taking calculated risk and start building this wealth.

Speaker 1: 19:27

Let me know what is it of risk that is holding you back? Like what is it? Is it the knowledge? Is it just the fear of losing your money? Like what is stopping you? All right. So that's it for this episode. Don't forget to share this and let me know your thoughts and what is stopping you All right. So that's it for this episode. Don't forget to share this and let me know your thoughts and what is holding you back. Other than that, I will see you in the next episode. Bye.