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Opinions of Monday, 10 September 2007

Columnist: Appeadu, Charles E.

Positioning Oneself in the US Economic System

I am writing this piece as a very simplistic but, hopefully, helpful summary of some of the things that immigrants can do to position themselves for better living in the US. Although I write from the point of view of the United States, I suppose many of the points discussed below will apply equally to immigrants in Western Europe, Australia and Canada.

Immigrants have unique problems that non-immigrants don’t face. First, many of us come here at a rather late stage in our lives – past pre-university age. Second, we did not grow up here and so it is difficult to identify the areas of high demand and we lack the family support and the contacts that those who went to school here have. In addition to all these, most of us here are from very poor backgrounds and come here with next to nothing. What is the way out for immigrants, then?

1. The Just-Finished-High School Immigrants

If you come here just after completing high school (SSS in Ghana), then find some work to do that will just be enough to pay your rent and buy you food and basic necessities. Then apply to College. If you are interested in Health Care, then you are in a high demand area. Nursing, Pharmacy, Medicine and paramedical areas like short courses in Ultrasound Technology will continue to be in high demand. Do not get discouraged even if you did not take science courses in Ghana. You just need to be a little strong in English and some Mathematics and have a passion to learn. Depending on your specific situation, you can enroll in a 2-year associate degree program leading to your RN licensing exam or a 4-year degree, or a six-year Pharmacy program or a premed degree leading to Medical school. If you choose to go to areas other than health care and you are strong in Mathematics, majoring in a science subject or engineering or other technical areas might position you well for an MBA with concentration in Finance or Accounting. I am assuming that you are interested in these areas. I am in finance so I might be biased in favor of finance. My rule of thumb is that if you are well above average in analytical ability, then Finance might be one of the best areas for you. However, if you are not in that upper group, finance might not be that good. This is so because a Finance degree without a professional designation like the CFA or CFP will on average not be that valuable. For those who are likely to stop at the undergraduate level, a course like Accounting might be better than Finance.

2. Immigrants with Bachelors or Higher degree

If you are not too old, please consider continuing your education. Don’t worry too much about making money initially to put up houses in Ghana. By all means use your strengths to acquire further education. If you are strong in Mathematics, look into Finance, Computer Sciences, and Engineering etc. In Ghana, those who are strong in mathematics always think of getting an Engineering degree. Here in the US, the choices are almost limitless. However, again I am very practical so I will say try to get into an area that can withstand the ever-present discrimination. What I mean is that you should try and get into an area that has such a high demand that you will get a job even in the presence of discrimination. I have mentioned that nursing is one such area. I know of nurses who work 4 days a week (12 hour shifts) and make over $100,000 per year.

3. Immigrants too old to go back to school

If you are a recent immigrant to the US and you are too old to go back to school, do the best you can with the low paying job available to you. But you should aim at stopping the struggling at your generation. Focus on educating your children. Get the children involved in generating income from part time jobs as they go to school (this may vary from family to family). Make friends with educated parents so your children will get exposed to academic environments. If you are a Christian and you want to join a church, all other things being equal, look for a church that has tutoring programs for children and use some of your hard earned money to aid in the education of your children – buy books for them and if needs be pay for someone to give them extra tutoring. This will eventually pay off far better than if you had built a house in Ghana or spent the money on lavished funerals etc.

Now this applies to everyone. As you work, make retirement savings your priority. Save as much as you can in your company-sponsored tax-differed 401k plan. Most companies also contribute to your retirement account. At retirement this is likely to form the biggest portion of your wealth. Although it may seem that the retirement account grows too slowly for your taste, this is one of the surest ways to wealth accumulation. From 1950 to 2006 the US stock market (measured by the S&P 500) has had an average total return of 11.9% per year. Let’s take as an example a 30-year old worker who contributes $400 per month (including $100 from his employer) for 30 years. If we use a figure of 11% return per year, this individual would have accumulated $1,971,319 at age 65. Of course, in today’s money, that will probably be about $830,657 which is still higher than most Americans have in their retirement account. With average lifespan for Americans increasing, an average retiree (at say 65) should look at living another 20-30 years. If we assume you will live 20 years in retirement, your retirement account assumed above can provide you a monthly income of about $14,814 (about $6,200) in today’s money. Remember that this does not include your social security income; neither does it include any savings your spouse might also have. This is just for illustration. Some can do better and others may not be able to contribute as much as I have assumed here. Most of us can put a stop to poverty in our family line with proper planning.

Charles E. Appeadu, Ph.D., CFA

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.