When I think of the middle class, I imagine an average professional who is educated and has some disposable income to invest. This is the definition used by UKAID.

Like many people, I thought the main challenges to middle-class wealth were limited capital and restricted access to opportunities.

I believed this group was shut out of high-value investments by the establishment because they didn’t have enough funds, competence, connections, or financial literacy. It wasn’t until I started my own cooperative that I realized this impression wasn’t completely true.

My Investment Cooperative Model

The brilliance of my cooperative was pooling small amounts of money from the middle class into a large institutional fund with access to privileged deals. Aggregation solved the capital and access issues.

We also developed a free investment course for our members which helped with financial literacy. Then, we got a SEC license and recruited a pan-African management team, to address competence and connections.

Things Are Not Always as They Seem

To my surprise, I discovered that the things holding back the middle class are more emotional than rational. I’ll highlight a few.

Fear and Limiting Beliefs

Some investors have barely escaped poverty. They are not yet sure about their capacity to remain prosperous and so cling to what they have now.

Planning for the future seems like an abstract concept and It’s hard for them to believe they can become rich.

Financial independence is something that happens to other people, not to them. What they can conceptualize is perhaps winning the lottery or having a lucky break. This belief system explains why many have fallen prey to Ponzi schemes and how MMM was popular in Africa.

Risk and Reward

Some investors are incredibly risk-averse. Again, it goes back to holding on to what they have now instead of investing in an uncertain future.

I try to convince them that risk can be managed by assigning only a small percentage of their disposable income to big bets. As long as risk is correlated with reward, not taking risks at all is not an option for creating wealth.

Ignorance and Learning

It’s one thing to not be financially literate. It’s another to not do the hard work of learning. And so, instead of gaining knowledge, many middle-class investors have put blind trust in advisors. They rarely fact-check what they’re told or apply only what works for their personal circumstances.

While I understand that some people are intimidated by numbers, however, financial literacy comes in many forms that are fun and accessible. Anyone can learn.

Greed and Responsibility

Many honest investors have fallen prey to nefarious schemes. They invested and lost more than they should have in high-risk investments and this turn of events deserves sympathy.

But what I cannot countenance is avoiding responsibility or looking for someone else to blame for a loss. It means you may not have learned your lesson and might not be invited to other opportunities in the future.

Patience and Pay offs

Finally, it’s tough to convince the middle class to delay gratification. Wealth creation is a deliberate effort that takes at least 5 to 10 years. The process cannot be rushed.

As an investor, during those years, there will be sacrifices as you defer spending and choose instead to compound your returns.

There will be holidays you can’t take because you’re buying assets. Things you can’t get now because you are saving for the future. But I assure you it’s worth the wait.

If you pay the price now, you will surely know the sweet satisfaction that comes from building wealth and the assurance that you deserve it.

PS: To learn more about my investment cooperative for Africans and Diasporans, check out Vizient Coop.

For more, please read Venture Capital Dynamics Gone Mad!

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