As curiosity in investing grows, Folks of Shade are nonetheless lagging behind, a CNBC ballot exhibits
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People of Color are still lagging behind when it comes to investing, according to a new survey by CNBC / Momentive Invest in You.
Half of US black adults and 49% of Hispanics currently own no individual stocks, mutual funds, bonds, exchange-traded funds, cryptocurrency, or real estate. 32% of Asians and 28% of whites said they had not invested.
Broken down by gender, 59% of black women are not invested in anything compared to 48% of Hispanic women, 34% of white women, and 23% of white men.
The gap is also evident in old-age provision. Most glaring: Almost twice as many white men (63%) have a retirement account as black women (32%), according to the survey. Only 33% of black men currently have a retirement account. Momentive surveyed 5,523 US adults between August 4 and 9; 45% of them are investors.
In the meantime, new investors have entered the market in the past 18 months.
While the racist investment gap is far from being closed, more colored people than whites entered the market during this time. Almost half (47%) of black and 45% of Hispanic investors started investing in the past 18 months, compared to 20% of their white counterparts.
This is what financial planner and investor Delano Saporu, CEO and founder of New York’s New Street Advisors Group, experienced firsthand. He said he had a huge rush of people in early 2021 who have since returned to normal.
“It doesn’t take an amount to do something that will benefit you over the long term,” said Saporu, who does not have a minimum customer account.
The ability to participate in the stock market depends, of course, on your disposable income.
“Often the problem with saving and building wealth is people not making enough money,” Shelley Stewart III, co-author of a June McKinsey & Company report entitled “The Economic State of Black America,” recently told CNBC .
“We have to approach this as a broader society, typically with colored communities.”
Black Americans have long faced wealth and wage differentials. The McKinsey report found that the median annual wage for black workers is about 30% lower than that of white workers and that 3.5 million of the country’s black households have negative net worth.
In addition, black households generally have fewer family wealth, according to the report. It estimates a $ 330 billion discrepancy between black and white families in the annual flow of new wealth, 60% of which comes from inheritance.
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Certified financial planner Malcolm Ethridge, a financial advisor with CIC Wealth Management in Rockville, Maryland, also cites the impact of student loans on investment ability.
“I speak to my friends who say they still don’t invest even after making it as accessible and desirable and fun as it has become in the past year and a half,” said Ethridge, who said about half of his clients said identify as black or African American.
“Every time someone tells me they are not investing, it is because they have a huge burden of student loans that they are working through.”
The survey found that black Americans currently have more student loan debt than whites, Hispanics, and Asians. Again, black women are most affected: 30% of white men, 16% of white women, 17% of black men, 11% of Hispanic men, and 17% of Hispanic women have reported student loan debt.
Saporu also sees people reluctant to go public because they fear risk. Plus, black Americans don’t see many financial professionals who look like them, he said.
“There aren’t many minorities who talk about investing, especially for young people,” said Saporu.
One way to tackle racist investment and the wealth gap is for businesses to step up, Ethridge believes.
Instead of spending money researching the void, they should use that money in the communities that need help most.
“You would be really better off spending those millions of dollars paying professionals to go to communities to teach people about personal finance,” he said.
“Talking … about how to manage your resources so they have something left over.”