More Black Americans Investing in Their Future
July 7, 2008 - 7:02 PM
Findings of a recent study show black Americans are planning to start investing at higher rates than whites. Members of the African-American leadership network Project 21 are excited at future prospects of wealth and prosperity this will create for the black community.
"We have made great strides in our fight for equality, but without a strong financial base, blacks will never completely reach parity," said Project 21 member Anthony Anderson. "The fact that black Americans now realize the importance of investing gives them the strongest tool to ensure their civil rights."
According to the 1999 Black Investors Survey (BIS) commissioned by Ariel Mutual Funds and Charles Schwab & Co, 48 percent of black households earning over $50,000 that do not already own stock or investments in mutual funds intend to do so in the next year, as opposed to 34 percent of whites. Blacks are overcoming the disadvantage of not being aware of savings and investment tools until later in life. They are now also far more likely than whites to read books about investing, attend investment seminars and join investment clubs.
Some other BIS findings include:
- 67 percent of blacks surveyed participate in employer-sponsored retirement plans, and 34 percent have their own individual retirement accounts (IRAs).
- 48 percent of blacks currently invest in mutual funds, 38 percent in individual stocks and 26 percent in money market accounts. 73 percent believe the stock market is a great way to compound their savings.
- 86 percent of black Americans want their investment companies to benefit the local community.
- Black Americans said saving and investing was their top New Year's resolution, while white Americans said their top priority was finding more time to relax.
This investing behavior puts black Americans ahead in preparing for the future. Previous studies have shown the baby boom generation is ill-prepared for the future despite its low confidence in Social Security. A January 1997 Public Agenda survey found that 46 percent of all Americans have less than $10,000 saved for retirement. However, the average amount of money invested or saved by black respondents in the BIS survey is $313 a month. With Social Security's future at risk, four out of ten respondents in the BIS also believe investing retirement funds in the stock market was a good idea.
"Earning power for African-Americans is increasing steadily," said Project 21 member Sharon Hodge. "By the year 2000, our financial clout is expected to reach $500 billion in assets. The rise in investment planning is an indication that black men and women are not just intelligent enough to earn the money. Black people clearly have developed the financial savvy to put that money to work for secure retirement years and their children's inheritance."