The level playing field West Philly’s financial literacy program
“It’s not rocket science. It’s easy, ”says Keith Weigelt, professor emeritus of management at the Wharton School of Management at the University of Pennsylvania, to invest in the stock market. “People think it’s so hard to get rich on the stock market, and it really isn’t.”
It is this philosophy that is behind the Bridges to Wealth program, which Weigelt co-founded with fellow U Penn teacher Jill Bazelon. He uses the investment to create and build intergenerational wealth across West Philly, the community through which Weigelt goes to work every day.
During a bipedal commute in 2012, he began to think “we should be doing more for the neighborhood,” Weigelt says. “I started to think about… financial literacy and financial empowerment in terms of getting the high returns that rich people do. “
“Other people have that in their families – they grew up with stocks, bonds, mutual funds and all that good stuff, but for people who didn’t grow up with it, this is all foreign,” says Kevin Brown, director of the Neighborhood Advisory Council at People’s Emergency Center, a West Philly community group that has been involved in the Bridges to Wealth program for a few years. “It levels the playing field somewhat, or attempts to do so.”
To begin offering wealth-building opportunities to the surrounding community, Weigelt reached out to churches in West Philly, which he said immediately saw the value of the program, and Bridges to Wealth was born.
“Some 90% of American households with less than $ 50,000 in wealth put their money only in banks,” Weigelt explains. Due to the low returns associated with savings accounts (the the average return on a savings account is 0.06%), “You can’t get rich by putting money in a bank,” he says.
The program teaches participants how to invest in the stock market in a high-return, low-risk manner through mutual index funds – a group of stocks or bonds that track stock indexes like the NASDAQ or the S&P 500 that generally increase over time. Since investments automatically follow an index, this is a simple, hands-off approach. Participants can invest on their own, with individual help from Weigelt, or join an investment group, where they pool their money to make larger investments, and therefore more returns, collectively. To date, the group’s average return has been over 18%, and in the nine years of the program’s operation, none have lost any money.
The program begins with six hours of financial literacy training that covers credit management, asset building and liability reduction. Then participants can move on to individualized services such as one-on-one consultations, investments in community groups, or both. Bridges to Wealth is also partnering with 15 schools to teach high school students the basics of financial literacy and entrepreneurship, and works with parents to discuss saving for college.
Most of the one-on-one sessions hosted by Weigelt aim to get the most out of people’s 401k retirement investments. “A lot of participants have several small 401k plans in different places because they changed jobs,” he says. So, he works with them to consolidate all their investments in one place, usually recommending a low-cost or no-cost account such as those offered by Charles Schwab.
Then there are the 2,000 or so community group investors. Weigelt estimates that 97% of the participants are minorities and around 75% of the participants are women, many of whom are single parents. They meet about once a month to discuss their investments as well as their individual investments, personal or business goals, investments for children, etc., providing a social component similar to that of the church, depending on Weigelt.
Individually and collectively, they have been very successful.
“Some people bought houses. We have seen people afford to retire and open accounts for their children, ”he says. During COVID, the group turned to offering 1% interest loans to members who needed emergency funding. The most important result, however, has been empowerment.
“It’s a different relationship with money. Our financial IQ has increased, ”says Brown. “One of the keys to the success of the program has been to deliver the information in a way that is not patronizing and patiently waits to build trust. “It’s important that you earn their trust and explain things to them simply, but don’t talk to them with contempt,” Weigelt says.
And there is no reason to do it, the group is behaving wonderfully.
“The year before COVID, we had over a quarter of a million dollars in the community fund and we were investing around $ 200,000 per year with an average contribution of $ 10 every two weeks,” Weigelt notes. “It’s not like we’re using sophisticated trading strategies. We invest in simple, low cost index mutual funds. You can get rich by doing this, you just have to start.
Cinnamon Janzer is a freelance journalist based in Minneapolis. His work has been featured in National Geographic, US News & World Report, Rewire.news, and more. She holds a master’s degree in social design, with a focus in intervention design, from the Maryland Institute College of Art and a bachelor’s degree in cultural anthropology and fine arts from the University of Minnesota, Twin Cities.