Why More Black People Are Investing in the Stock Market

More black investors are looking to the stock market to grow their wealth. Ariel Investments recently conducted a nationwide study looking at the investment habits of various demographics.

According to the research, “About 67 percent of African-Americans with incomes of at least $50,000 have money invested in stocks or stock mutual funds. That compares with 60 percent in 2010 and 57 percent in 1998.”

Ariel attributes much of the confidence in the market to involuntary enrollments in 401(k) plans. Many employers did not ask, they simply enrolled their employees in the plan. While African Americans have historically been wary of the stock market, the investments made through the 401(k) plans on their behalf have earned them good returns. This has sparked an interest in investing more money in the market.

Prior to the stock market crash in 2009, the highest number of African Americans were investing in the stock market at 74 percent. After the market and housing crash, the numbers dropped to 57 percent. To see them climb back to the high 60’s is encouraging. As a yardstick, the lowest percent of white investors, even through the market crash, was 76 percent.

This is important because after the crash the market rebounded. According to the Network Journal, it grew 150 percent soon after 2009. Those with their money remaining in the market made back much of their losses or more. Many black investors did not get to take advantage of this rebound since they had pulled their money out of the market in an attempt to save their homes. The research did find some startling changes in the investment culture, however. “Although only 50 percent of whites are optimistic about the economy, about 75 percent of black people said they feel hopeful about the economy, and 65 percent of black people thought the economy had either recovered from the recession or was on its way to a full recovery.” Further, the percent of black people who feel that the stock market is the best way to invest rose from 28 to 41 percent. This is partly related to continued bad feelings about the housing market.

While African Americans may see a bright future, they are still more cautious than before. “In 2003, 42 percent of black people and 28 percent of white people thought they’d retire before age 60. Now, only 17 percent of black people and 10 percent of white people think they will.” Source

Comments
No. 1-2
jfthomas05
jfthomas05

As am I. Tired of being ignorant to the information that wealthy people possess.

pete
pete

This is a good trend to see