I'm a financial planner and a woman of color, and I can tell you firsthand that investing is the way to build generational wealth

• I moved to California from the Philippines when I was 2 years old.
• I focus much of my work as a financial planner on helping people of color build generational wealth.
• Many women of color don't invest, but it's a fruitful way to build wealth that can't be overlooked.

When I was growing up, my dad told me I had three career options: teacher, lawyer, or doctor.

I was born in the Philippines and moved to California when I was 2 years old. When I told my dad I was going to college to study literature, he said they might as well buy a car with the tuition they'd pay.

In 2008, I took my literature degree and (surprise, Dad!) started a career in financial services. I read The Wall Street Journal every day and had no idea what any of it meant. My first year in the industry, I thought I'd made a huge mistake.

Seven years later, I started my own financial-planning business, Brunch & Budget, because my friends felt as lost in their finances as I did when I started my career. Many of my clients were women of color who didn't even know they had 401(k)s, and they weren't investing because every other part of their finances felt so precarious.

Many women of color haven't yet touched the stock market

"Broken down by gender, 59% of Black women aren't invested in anything, compared to 48% of Hispanic women, 34% of white women and 23% of white men," CNBC reported, breaking down the results of a poll it conducted that surveyed 5,500 US adults in August.

Lest you think those results were skewed by the pandemic, Mariko Chang and Asset Funders Network released a report about women and wealth in 2015 that said women of color experienced both gender and racial wealth gaps. In fact, as cited in the report, the median wealth for single Black women was $200, and the median wealth for single Hispanic women was $100. The report also said that millennial women of color had a median wealth of zero, and women ages 35 to 49 had a median wealth of $1,000.

My clients of color were often first-generation college grads, first-generation Americans, first-generation high five- or six-figure-income earners, and sometimes all three. This led my husband, Dyalekt, and I to focus our Brunch & Budget podcast on personal finances and racial economic inclusion, to create a program for people of color to build generational wealth called See Change, and to do deep research on the racial wealth divide.

When you put the stats above side by side, it can be easy to assume that women of color have low median wealth because they don't invest, but our research shows the opposite.

People are wrong about why women of color don't invest

The reason women of color haven't been able to accumulate wealth isn't because they haven't invested in the stock market. The reason women of color haven't invested in the stock market is because they haven't been able to accumulate wealth.

When you're the first person in your family to graduate from college and make six figures, you're more likely to support other family members financially, less likely to have a history of homeownership in your family, more likely to have student debt, and consequently, less likely to have surplus money to invest. If this is you and you don't have a large investment account, it's not your fault.

If you're suspicious of participating in an investment system that profits off the backs of Black bodies (looking at you, prison industrial complex) and by exploiting laborers of color (looking at you, giant online retailers), I hear you. The system is not designed for us, but it is marketed to us — the stock market included.

But do I need a 401(k) and Roth IRA? Yes. (More on that below.)

As Dyalekt concluded in our podcast, these companies are already profiting from us as consumers, so we need to find ways to gain power to profit from these companies as investors, especially if you're a woman of color. Investing in the stock market is a necessary component to building generational wealth.

One of the easiest ways to start investing is to put your money in a tax-advantaged retirement account. You need to get cozy with a number, an abbreviation, and a name: 401(k), IRA, and Sen. Roth.

3 accounts women of color should know to start building wealth

1. 401(k)

If you have an employer that offers a 401(k), you can start investing through a direct deduction from your paycheck. Think of your 401(k) as a bucket that holds investments. You save money on taxes for every dollar you add to the bucket, and the bucket is impervious to taxes while the money is sitting in there.

Sometimes the bucket springs a leak, and the value of the investments goes down, so there is risk to putting money in the bucket. But because you keep adding money to it every paycheck, the leaks in the bucket are small compared to the growth that compounds over multiple decades.

You leave the investments in the 401(k) bucket until at least age 59.5 (or pay a 10% penalty for taking it out early), and you pay taxes when you take the money out.

2. IRA

An individual retirement arrangement works almost exactly like a 401(k), except your employer doesn't need to provide it. Anyone can open an IRA. You save taxes on every dollar you add, and the IRA bucket also repels taxes as the investments grow. This is particularly exciting because it means you can trade stocks, mutual funds, or exchange-traded funds in an IRA and won't pay taxes on any gains. Gains on gains on gains.

3. Roth IRA

A Roth IRA, named after Sen. William Roth, is a special investment bucket where you don't save money on taxes upfront, but the bucket protects the investments from taxes when the money is in the bucket, as well as when you take the money out! That's right, it's a bucket of tax-free investment growth. (Note that your contributions are subject to income limits.)

If you don't use the Roth IRA in your lifetime, you can name beneficiaries who will inherit that money and be able to withdraw it from the Roth IRA tax-free. Tax-free generational wealth? Stop. It. (If your company offers a Roth 401(k) — thanks, senator — the same rules apply.)

Start building wealth one step at a time

Investing is complex and full of jargon. It's designed to make us feel like we can't participate and ashamed that we don't participate. Maybe my dad and I were both right: Financial planner isn't far off from the other professions, but literature gave me the foundation to be able to break down the jargon and ultimately break through the barriers as an immigrant woman and as a woman of color.

What do you already have in you to break through these barriers? The stats are staggering, the financial world is daunting, but you're still here. Like your family before you and their family before them, take it one step at a time, and you may create a path for the next generation to thrive.

• Read more from Women of Means:
• 4 tips for busy moms who want to start investing, from an expert investor and mom of 2
• Women are underrepresented in investing — here are 4 ways we can close the gap and work toward equality
• A 30-year-old physician assistant who spent 7 years in school missed her 'prime investing years,' and she's not the only one
• My dad helped me buy my first stocks at age 8, and I remember what he taught me about money to this day