The Investment Race Gap: Can It Be Bridged?

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A study from Charles Schwab and Ariel Mutual Funds found that black people are 35% less likely to invest in the stock market. Based on both blacks and whites who earned over $50,000 a year, the findings show a huge disparity between races. In simple terms, white men and women have the opportunity to increase their wealth opposed to 35% of the black community. Experts warn that shrinking this gap is essential for minority communities but is it possible? The data shows that the disparity is based on social and cultural differences which are difficult to transform. Still, there seems to be light at the end of the tunnel.

Trust And Perception

The stock market, dominated by rich, middle-aged white men, isn’t viewed as minority-friendly. Indeed, there are numerous examples of black men and women who came off worse as a result investing in stock options. This perception has led to a lack of trust in the black community, which feels that it’s a white male’s game. The only way to change this view is to get more black people involved at every level of the investment industry. Workplace plans are the key as half of African Americans surveyed said this was the reason they had or would invest in stocks.

Money Making

Mellody Hobson is a Good Morning America contributor, and she thinks the explanation is simple: black people don’t earn as much. The racial divide has been apparent in the US for decades, and the lack of financial equality is one reason. The study shows that the higher up the wage structure you go, the less the disparity occurs. Blacks and whites who earned $100,000 a year own equal percentages of stock according to Schwab and Ariel. On average, blacks with six-figure wages are three times more likely to hold options than those earning under $75,000. Programs which prevent accumulation of wealth in minority communities, such as discriminatory housing, must stop if anything is going to change.

Accessibility

Investing in the stock market takes a certain level of knowledge. Because education on investment isn’t as strong in the black community, experts believe they don’t have the same accessibility. Finding out how to pump money into an option can be hard enough. Also, it’s a terrible investment and a major risk. However, cryptocurrencies are changing the game and leveling the field. A BTC IRA account is a Bitcoin retirement plan. All anyone needs to invest now is a mobile device and some startup capital. Or, there are agencies and middlemen which make the process easier and people can hire one to guide them through the process

Patience

Although there is a gap, there has been a lot of encouragement over the years. In 1998, for example, 26% of black investors had assets with a brokerage company. Now, the number is up to 37% and rising. In the same year, 57% of black people owned stocks and that number is now 69%. The tide is changing, but there has to be an increase in education to allow for continued growth according to ABC News. When minorities understand the need to play the long game, they can benefit more from the stock exchange.

The answer is yes: the gap is possible to bridge with better education, higher wages, and more opportunities.