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Black Investors Have Become The ‘Fastest-Growing’ Demographic Of Stock Buyers In America, According To A Report

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Black Investors Have Become The ‘Fastest-Growing’ Demographic Of Stock Buyers In America, According To A Report​

Samantha Dorisca
Tue, Jan 16, 20242 min read

eeb1aaa6beda96579cf78bc041dd8749

Young Black investors are taking initiative in the stock market.
According to a study conducted in 2022 and now released by Ariel Investments and Charles Schwab, 68% of Black respondents under 40 are now investing in stocks in comparison to 57% of younger white respondents.
“You’re seeing topics of money and investing coming up at the dinner table slightly more among Black families than they had ever before,” Arielle Patrick, chief communications officer at Ariel Investments, told The Wall Street Journal.

In December 2023, The Wall Street Journal disclosed a broad statistic about Americans, indicating that 58% of U.S. households possessed stocks in 2022, marking a 5% rise from 2019. Based on a Federal Reserve survey, the data encompassed individual shares, funds, retirement and managed accounts.

The rise was credited to the aftermath of the COVID-19 pandemic, which shifted different financial habits for Americans and led to the first investment in the stock market for some.
“It created a whole generation of investors,” Anthony Denier, CEO of mobile brokerage Webull U.S, said, according to the outlet.
It is important to note an alarming trend reported by Ariel Investments and Charles Schwab among Black and white investors. While it does appear individuals are energized when it comes to investing, there also appears to be a lack of education surrounding those investments, according to the study. In fact, 47% of Black investors and 45% of white investors reported they had invested their money in a sector where they lacked a full understanding.
Black investors also mentioned they were more likely to inform their investment decisions based on sources that are less credible. As a matter of fact, 33% of Black investors linked their investment interest to information found on social media — a number higher than that of white investors, which was less than 25%.
“The confluence of low stock market participation, appetite for risky investment options, and alarming lack of knowledge about fundamental investing principles is a red flag about the critical need for greater investor education,” Mellody Hobson, co-CEO and president of Ariel Investments, said in the study. “Many new and younger investors have never experienced market volatility like we’ve seen in the last couple years, and we have a responsibility to educate these new investors about the value of long-term investing to build wealth and achieve financial security.”
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The industry's opportunity to work with new Black and Hispanic investors​

The wave of new retail investors flowing into brokerage firms in the wake of federal stimulus checks during the pandemic included many younger clients from historically excluded groups.

A few years ago, the GameStop short squeeze and the larger "meme stock" movement led to a surge in new customers. The growth of non-retirement investment accounts was faster among Black, Hispanic and Asian Americans compared to whites in the U.S. during the six years ending in 2021, according to a Jan. 10 report by the FINRA Investor Education Foundation. Black and Hispanic investors represent, on average, an especially younger group with less wealth than the industry's traditional older, more affluent client base. The slideshow below displays the takeaways from FINRA's research and education arm.

"While the increase is encouraging, these new investors of color are navigating uncharted waters with little guidance and are actively looking for someone who understands their situation to help them learn more about investing," the report said. "Financial education leaders, policymakers and regulators will need to adapt in order to reach these audiences (non-white investors, younger investors)."

For an industry promoting financial literacy as one aspect of removing the barriers of access to wealth-building tools and connecting with a new generation of clients and financial advisors, the report presented a glimpse into some of the inherent challenges.

To convert the new brokerage customers into long-term wealth management clients and professionals, the industry will need to adopt new methods using the examples of innovators and of Black and Hispanic Americans themselves, according to Eugenié George, the author of "Our Money Stories" and the head of content and strategy with Changing How Individuals Prosper (CHIP), a client matchmaking service for Black and Latino customers and financial professionals. In an email, she offered four ideas for the industry at large:

  • "Acknowledge that this work takes time. Build trust and hold workshops in places that you would never go to understand what people are interested in. A few years ago I went to a workshop with Celeste Revelli and she taught a class about money pro bono in Philadelphia, and the demographic was predominantly Black and Hispanic. We had a great time, but it helped put things into perspective to hear what people wanted for their families.
  • "Reframe what milestones look like for investing: Historically, we've been successful at savings; look at the Freedman's Savings Bank or even with first-generation Black and Hispanic Americans with remittances so if we know what steps they take based on savings, i.e., family, security. We should market in a communal sense.
  • "Sliding scale: this is a concept that I've seen plenty of yoga teachers take on. It's using a scale pay method. Many folks pay the premium price, but they offer different tiers and only offer three seats.
  • "Finding folks who are hungry for change. We know that Black and Hispanic female business owners are on the rise. So create a method where we can help them organize their wealth first, through milestones. So find business accelerators and business groups that have women, and ask them what are they interested in."
The report's findings reminded FinLit Tech Chief Education Officer Mac Gardner — a longtime wealth management professional who's the author of "The Four Money Bears" and the founder of a college planning fraternity — of the movie about the GameStop saga, "Dumb Money." As much as the incoming group of younger and more diverse investors reflects a positive sign, the ease of trading through Robinhood and other digital platforms brings real risks, Gardner said.

"You have to have education in knowing that what goes up will eventually come down," he said. "It's almost like a loaded weapon, but you're not teaching them how to use that weapon."

For the most interesting research from the FINRA Foundation's report, "Investors of Color in the United States," scroll down the slideshow. And follow the links below for Financial Planning's coverage of other reports by the FINRA Foundation:

Note: All of the data comes from the FINRA Foundation National Financial Capability Study, an online survey of 2,756 U.S. adults between July and December 2021 who said they have non-retirement investment accounts. Researchers then conducted six online focus groups last March with groups of minority investors aged between 21 and 34.
 
DC_Dude said:

Black Investors Have Become The ‘Fastest-Growing’ Demographic Of Stock Buyers In America, According To A Report​

Samantha Dorisca
Tue, Jan 16, 20242 min read

eeb1aaa6beda96579cf78bc041dd8749

Young Black investors are taking initiative in the stock market.
According to a study conducted in 2022 and now released by Ariel Investments and Charles Schwab, 68% of Black respondents under 40 are now investing in stocks in comparison to 57% of younger white respondents.
“You’re seeing topics of money and investing coming up at the dinner table slightly more among Black families than they had ever before,” Arielle Patrick, chief communications officer at Ariel Investments, told The Wall Street Journal.

In December 2023, The Wall Street Journal disclosed a broad statistic about Americans, indicating that 58% of U.S. households possessed stocks in 2022, marking a 5% rise from 2019. Based on a Federal Reserve survey, the data encompassed individual shares, funds, retirement and managed accounts.

The rise was credited to the aftermath of the COVID-19 pandemic, which shifted different financial habits for Americans and led to the first investment in the stock market for some.
“It created a whole generation of investors,” Anthony Denier, CEO of mobile brokerage Webull U.S, said, according to the outlet.
It is important to note an alarming trend reported by Ariel Investments and Charles Schwab among Black and white investors. While it does appear individuals are energized when it comes to investing, there also appears to be a lack of education surrounding those investments, according to the study. In fact, 47% of Black investors and 45% of white investors reported they had invested their money in a sector where they lacked a full understanding.
Black investors also mentioned they were more likely to inform their investment decisions based on sources that are less credible. As a matter of fact, 33% of Black investors linked their investment interest to information found on social media — a number higher than that of white investors, which was less than 25%.
“The confluence of low stock market participation, appetite for risky investment options, and alarming lack of knowledge about fundamental investing principles is a red flag about the critical need for greater investor education,” Mellody Hobson, co-CEO and president of Ariel Investments, said in the study. “Many new and younger investors have never experienced market volatility like we’ve seen in the last couple years, and we have a responsibility to educate these new investors about the value of long-term investing to build wealth and achieve financial security.”
View Comments
Click to expand...


For myself... I always wanted to know about, but my cousins best friend taught me about as much as he could before the covid crash.. then perfect timing...from there I was listening to trapper n earn you leisure.. they helped me get it..plus a small class I took..but I dont need this to be all in the news... let us do our thang quietly...
 
Ceenote said:
For myself... I always wanted to know about, but my cousins best friend taught me about as much as he could before the covid crash.. then perfect timing...from there I was listening to trapper n earn you leisure.. they helped me get it..plus a small class I took..but I dont need this to be all in the news... let us do our thang quietly...
Click to expand...

I agree lol
 
tontotonto said:
This is a start, just stay away from clowns like chris sain who give bullshit tips and crypto. Please remember to invest and not trade
Click to expand...
Yeah I agree..like you said if your investing...do that..but trading has a greater reward but also a huge risk!! Every now and again I may do a swing trade.. but that it... hell I'm proud of myself for sticking with something I wasn't sure about to now somewhere I am very comfortable being at..
 
easy_b said:
I said this a couple days ago the black middle class and Rich are doing really good right now especially under Joseph Biden. I have been playing with the stock market a little bit ever since I got laid off and I am doing very good. My 401(k) already this year gained six or 7 grand.
Click to expand...
No no no no Biden is bad!!! Tangibles!!! Don’t vote !!! Palestine is what all Black peoples should care about !!!!
 
I wish I started earlier (like at 20). But as long as I'm participating, I'm good. The brokerage account can get beat up sometimes, but gains are gains.
 
I'm not as in as I should be.

2 charles Schwab accounts with crumbs in them. Gonna at least max out the Roth ira contribution this year, I think it's 6000 or so max you can put in. The other one is my account to learn how to trade.

A few ameriprise accounts I inherited

A Roth 401 K and a traditional 401K. Looking strong there but....it's never enough.

I still got a LOT to learn about investing.
 
850credit said:
A Roth 401 K and a traditional 401K. Looking strong there but....it's never enough
Click to expand...
Ikr! I said this year when i get my raise instead me counting on it ill put 11% into my 401k. I do 10% and it doesn't hurt, but i tried 11 and 12... i kinda felt it...i also put random monies into my roth 401k as well...i was a late starter to my 401k..child support can hinder u sometimes..
 
850credit said:
I'm not as in as I should be.

2 charles Schwab accounts with crumbs in them. Gonna at least max out the Roth ira contribution this year, I think it's 6000 or so max you can put in. The other one is my account to learn how to trade.

A few ameriprise accounts I inherited

A Roth 401 K and a traditional 401K. Looking strong there but....it's never enough.

I still got a LOT to learn about investing.
Click to expand...
Ceenote said:
Ikr! I said this year when i get my raise instead me counting on it ill put 11% into my 401k. I do 10% and it doesn't hurt, but i tried 11 and 12... i kinda felt it...i also put random monies into my roth 401k as well...i was a late starter to my 401k..child support can hinder u sometimes..
Click to expand...
Yeah wish I started in my 20's but them damn student loans got me. Still was doing the 401K, but couldn't start with my Roth until about 3 years ago.

That shit is beautiful though. Tax free growth??? I think it went up to 7K for 2024 and I am damn sure going to try and max it out.

My job doesn't do a match and just put's 6% of your salary in the 401K so my goal this year is getting my ROTH contributions up hopefully to the max...
 
DC_Dude said:
Yeah wish I started in my 20's but them damn student loans got me. Still was doing the 401K, but couldn't start with my Roth until about 3 years ago.

That shit is beautiful though. Tax free growth??? I think it went up to 7K for 2024 and I am damn sure going to try and max it out.

My job doesn't do a match and just put's 6% of your salary in the 401K so my goal this year is getting my ROTH contributions up hopefully to the max...
Click to expand...

I'm contributing 26 percent I think. 13 percent to Roth and 13 to traditional. But I got other money coming in outside of work.

I'm trying to do an extra 200 a week, 115 to my personal Roth and 75 to my trading account.

I do live beneath my means to maximize savings.
 
DC_Dude said:
Yeah wish I started in my 20's but them damn student loans got me. Still was doing the 401K, but couldn't start with my Roth until about 3 years ago.

That shit is beautiful though. Tax free growth??? I think it went up to 7K for 2024 and I am damn sure going to try and max it out.

My job doesn't do a match and just put's 6% of your salary in the 401K so my goal this year is getting my ROTH contributions up hopefully to the max...
Click to expand...
Well...i always say as long as you get in..i was never taught how important it really was and and now how it really is! Our company matches up to 7% and kind of bonus stuff our union negotiated for...i still have to finish my roth from last year! I have a 7500 limit and i have 7200 in there working on my last 300. This year is 8000..im sure i wont finish until next year. Unless i get some unforseen overtime...then its on! We are all blessed, being able to share info with each other and shine a light and sometimes it may have been dark..!
 
The pandemic was really a blessing in disguise as far as getting money up for me. I had money in my brokerage account from an old rollover that I did not know what to do with it. I'm not a huge risk taker when it comes to large chunks of money but wanted something consistent and stable. I jumped into ETFs and picked some good ones (VTI, VOO, SCHD, etc.). Most of them have been in the green during this run except for one laggard but it should pick up in the next few years. I have more money on the sideline and just waiting to see how long this bull run goes. Particularly paying attention to the elections since that will be a big determining factor for the next 4+ years.

Working from home allowed me to pocket all the extra checks I had coming in along with anything I would be using to commute everyday. I stacked over $25K on that alone and have it in a high yield savings account making money daily. I'm much better off than previous years but I cannot attribute it to any president. I just got my shit in order and took advantage of all the time on my hands.
 
Last edited:

White people’s net worth outgrew Black Americans’ by 30 percentage points in the pandemic, New York Fed study finds​

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A strong performance in financial markets, particularly an outsize gain for the stock market in 2021, helped entrench existing trends of wealth inequality during the pandemic, new data released this week show.

According to a report from the New York Federal Reserve Bank, the real net worth of white individuals outgrew that of Black and Hispanic individuals by 30 percentage points and 9 percentage points respectively, from the first quarter of 2019 through the second quarter of 2023.

The period featured a remarkable level of government financial support and, after the initial shock of the pandemic, a surprisingly strong job market. The unemployment rate for Black Americans in particular is now at 5.3%, near a record low, compared to an overall unemployment rate of 3.7%. Earnings for the typical Black full-time worker are up 7.1% since before the pandemic.

Closing the wealth gap is more difficult because a significantly larger number of white households traditionally have money in stocks and mutual funds. A separate Fed survey shows that as of 2022, about 65.6% of white households had investments in stocks, compared with 28.3% for Hispanic households and 39.2% for Black households.

“The study really shows the difference between making gains when it comes to income, and closing that gap, versus when it comes to wealth,” said Janelle Jones, Vice President of Policy and Advocacy at the Washington Center for Equitable Growth.


While government support such as increased unemployment benefits and stimulus checks helped stave off a COVID-induced recession, financial asset prices rose so significantly with the reopening of the economy through 2021 that racial wealth disparities increased. And while those market-linked assets did fall in 2022 when the Federal Reserve rapidly increased interest rates, “those declines did not fully offset the earlier rises,” according to the New York Fed.

“Much of the divergence in net worth by race and ethnicity since 2019 can be attributed to divergence in the real values of financial asset holdings,” wrote the report’s authors — including the fact that Black households have more wealth concentrated in pensions than in stocks, mutual funds and exchange-traded funds, or ETFs.

More than 50% of Black financial wealth is invested in pensions, the New York Fed found. Less than 20% of Black wealth is stored in private businesses, corporate equities, and mutual funds. In contrast, less than 30% of white financial wealth is invested in pensions, with about 50% invested in businesses, equities, and mutual funds.

“Black workers are still more likely to be unionized, which may play a part in the pension story,” said Jones. “But how folks are exposed to the ability to invest in the stock market — whether or not it’s something they grow up doing — we know that’s different for white families than for people of color.” Black family members are less likely to get an inheritance, she said.

During the pandemic, the real value of Black-held financial assets dropped in 2022 to below its 2019 level and continued to decline steadily, while the real value of Hispanic-held financial assets dipped below its 2019 level in 2022 and stagnated. Neither group’s real financial assets have recovered to their 2019 values.

Owning a business is another component of financial wealth, and separate data show Black-owned businesses had a tougher time during the pandemic.

While less than 10% of all U.S. business owners are Black, Black-owned businesses were also more concentrated in industries hardest hit when COVID first spread, according to Economic Policy Institute analysis of government data. In April of 2020, more than 40% of Black business owners reported they were not working, compared with only 17% of white business owners.

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The industries with the largest total job losses early in the pandemic were also sectors where more Black-owned businesses are concentrated — accommodation, food services, retail, health care, and social assistance. About 28% of Black-owned businesses are found in these industries, compared with just under 20% of white-owned businesses, according to the Bureau of Labor Statistics.

Still, Treasury Deputy Secretary Walley Adeyemo said Wednesday that economic conditions are improving for Black households, citing rising employment and wages for Black Americans since before the pandemic, and an increase in Black business ownership and participation in the stock market.

Adeyemo suggested that some “policy prescriptions” might be needed to even out the distribution of financial wealth in the U.S.

“The gap between Black and white wealth in America is still too great,” he said.
 

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