The Savings Game (Pt. 2) - Family Business
	The Savings Game (Pt 2) Family Business HOLMES: Ivan Solano and his family are a classic American success story. They moved to Arlington from Peru and beat the odds by building a thriving restaurant. Like most small-business owners, the Solanos don't offer a retirement plan. Unidentified Woman #4: They do one thing--chicken--and they do it really well. Unidentified Woman #5: They have really good prices and really good food. Unidentified Man #2: I eat here every other day and it's the best chicken in town. Mr. SOLANO: We've been fortunate that the--that the people like the--the chicken. It's marinated for 24 hours. That's some secret that they don't even tell me. Basically my father, when he went for a year to Peru, he finally got this idea from Peru. I mean, he's always had the idea of opening up a restaurant, but for some reason or another, luckily, he got this idea because we--in Peru, you have these basically, like, probably every block, so we brought it here and it's been going good for us. Unidentified Woman #6: So I keep telling him--I said, `If you had a--had a--had a stock, we'd already be rich with you guys.' Mr. SOLANO: In Peru and--or in like--in all of South America, from my experiences and from my cousins and from my aunts and my uncles, they just don't make enough money where they can save and with the banks--I guess with--it would be similar to the savings and loans that you have here that--that something's happened and then--and then people are like desperate to get their money back. I think the banks over there--and I don't think it's just savings and loans. I think a lot of them are--are--are just unsteady with the economics down there. I'm not too trusting about--to be honest with you--retirement plans because of--of things that are going on that we hear about, like, especially in the Hispanic community in a sense of--of they say, `Well, you know, you're here. You don't have a plan and this and that.' And they offer them a plan and--and you--they pay it and they pay it and all of a sudden, I mean, that person disappears and--and word gets around really fast. Being a family business and being such a tight family--you know, my mother would--I'd just say, `Well, you know, take my paycheck. I'll just use what I need,' and my mother saves the rest for me. And if--to be honest with you, if it wasn't for my mother, I wouldn't have the money to put a down payment on the house that I have--that I own. That's what I mean by a tight family. We're--I mean--I can--I can trust my mother with anything. I can trust my father with anything. Seven. Thank you. (Spanish spoken) Everybody that works for the restaurant is basically on their own right now in the sense of retirement plan. I'm not too worried. Let's say something happens tomorrow to the business. I'm not too worried because I feel I can--I feel honestly that I can--I can get a job and if I have to, I'll get two jobs. I think a retirement plan is--is good. I believe a lot of people or--or any--or everybody should have it, but the problem is moneywise. Can you afford it, first of all? And second of all, can you trust that company or person with your money? My wife just had the--got the 4-0--Is it 401(k) plan? She doesn't feel she has enough to save where she's going to have enough where she's going to be steady during her retirement years, when she retires. She trusts her company. I mean, she likes National Life Association. She likes that association so, I mean, once she felt--she felt comfortable with it, I don't--I think--I think now she feels comfortable with getting that plan. Now that I'm 32, I guess you--you think about it more--about the future, whereas you--when you're younger, you don't think about it as much because you're living that day, you know. But now--I guess when--when you guys had mentioned it about the retirement plan, that's when I--I started thinking about it. HOLMES: Joining us to talk about the issues that Ivan raised is Nate Chapman, founder of The Chapman Company, a publicly traded financial services firm whose mission is to educate individuals and make them familiar with all of the opportunities that are out there to build wealth. Nate, thank you so much for joining us. Mr. NATE CHAPMAN (The Chapman Company): Thank you. HOLMES: Let's talk a lot about what Ivan said. He talked a lot about the issue of trust. Is that something that is very common with investors as you sit down and talk with them? Mr. CHAPMAN: Well, it's very common. Trust is a big issue with beginning investors and certainly with small investors. They want to make sure that the money that they've worked so hard for doesn't come into the hands of an investment professional and disappear. The investment professional, then, has got to take time to make sure he educates the person, to make sure they understand what happens from the point that they write the check all the way through the point where they get the monthly statement and, ultimately, if they need the money back for any particular reason, how they get the--how they get the money and how often they can get the money back. So trust is a big issue. HOLMES: You--you build that trust through the education. You want to educate `the investor. You don't want them just to say, `Here. Here's my money and'... Mr. CHAPMAN: That's right. You want to make sure that they are aware of all the alternatives that are out there; the fact that there may be alternatives that have a tax benefit; there may be alternatives that have a tax penalty; there are alternatives that limit your--your ability to access your--your money; and there are alternatives that give you free access to your money. So you want to make sure that you've educated the person so that when you choose that particular alternative, that that person has the right expectation. HOLMES: OK. Let's break down Ivan for a second and--and talk about a strategy for him individually--he and his family, his wife and kids, and then for his family business. What would you tell him if he was sitting here? Mr. CHAPMAN: Well, for him personally I would certainly suggest at 32 that he consider investing in a growth-type investment. Now there are two ways that we can do that. We can buy individual securities or we can go into a mutual fund. My suggestion, as a beginning investor, as a small investor, that he consider a mutual fund investment. That way he gets to perfers--professional management, he gets diversification of assets. He gets the ability to come in incrementally. I mean, there are some mutual funds that allow you to come in as little as $25 and add in $25 increments. So I would suggest for him the mutual fund. Now for the business I would look at what's called SEP pension plan or a semper fi employee pension plan. What that allows the employee to do is to defer a certain amount of his money each year tax-free. In other words, if you make $10,000 a year, you could take, for instance, $500 and put it into this SEP plan and only be taxed as if you made $9,500. That $500 then, you could decide how much you want in stocks, how much you want in bonds and the investment professional would sit down and help you make those decisions, with the right asset allocation. But I would certainly suggest that he consider a SEP or semper fi employee pension plan. HOLMES: Most of the employees in this business are family members. How vulnerable are all of them because there really isn't a retirement plan in place? Mr. CHAPMAN: Well, it is a very fragile position. The restaurant business--although he's got a great business--is a business that is known to be volatile. The restaurant industry is a volatile industry. If something were to happen--a new competitor in the area, someone gets sick, someone major in the company--they could be in substantial jeopardy without having a financial nest egg that's been properly invested. So having the--an investment plan and being able to set money on the side is not just something that's nice to do, it's an essential part of a business strategy. HOLMES: Yeah. And it's also important for the community in general for--to--to help build wealth. Mr. CHAPMAN: Well, it is very difficult to build wealth without having some access to what has built wealth in this country and that is the--the equity markets, the stock markets, the capital--the capital markets in general. The fact that he has not invested money and he's been in business over the last 10 years, he has given up a substantial amount of return. HOLMES: Give us a perspective over the--the business has been in there for 10 years--in existence for 10 years--not being in equity markets for him as an individual and for the business, all the members of the family, what they've missed out on. Mr. CHAPMAN: Well, first he's missed out on the longest bull market in history, the longest upside run in equity market history. But that doesn't mean all is lost. There is still the opportunity to set money aside. You know, for instance, had he invested in this bull market on a very conservative measure, he probably would be up 400 to 500 percent over the last 10 years as opposed to the bank alternative, where he--he's likely gotten a single-digit interest rate each year. So his money in a--although he works very hard to earn it, has not wor--worked very hard for him. HOLMES: Nate, thank you so much for being with us. Stay with us. When we come back, we will meet two people who thought they were prepared for the future. Mrs. RUTH JACOBS: It's like--like the floor opened up, you know, and--and I fell in. I just couldn't believe it. I couldn't believe that the company wouldn't have protected him.