In a 1999 Wall Street Journal article, Marilyn White, a financial planner at Morgan Stanley Dean Witter shared a conversation that had surprised her. White had been educating her clients, many of whom were Black, on the best ways to invest for the future.

But Ms. White wasn’t ready for a comment she heard at one of her seminars. A Black woman stood up and said “I’ve always been intimidated, fearful, to walk into a brokerage firm, because I thought I didn’t have enough money.”

It had never occurred to White that people would be afraid of investing.

Conservative Investments

That Walls Street Journal story was timed to coincide with the release of a study by Ariel Capital Management, a Black-owned money-management company in Chicago.

The survey, which followed the investing and spending habits of families with incomes of $50,000 and higher, showed that Blacks had far less invested in financial securities, especially stocks, when compared with Whites of similar incomes. Blacks, the survey shows, tend to favor much more conservative investment vehicles, including real estate and insurance.

Issue of Trust

The difference between Black and White investment behavior, say investment advisers, is mainly an issue of trust. Trusting others to handles one’s finances is never an easy call, but for an ethnic group with a rough history, putting money into something you can’t feel and touch can be frightening.

But others say Blacks feel more comfortable investing in real estate and insurance because those industries have a long history of marketing their products to Black consumers. “We know real-estate agents and insurance agents and more of them are Black. As we get to know more investment counselors and brokers,” investing among Black will likely grow, said investor Carol Davis.

Changing Perceptions

Move forward 20 years, and the Ariel Black Investor Survey is showing some positive trends. The results of their latest survey clearly show that Black attitudes towards the stock market are changing. Their 2013 survey revealed Black households were still only saving and investing half as much per month as White consumers, but by 2015 the survey showed that 20% more Whites were invested in the stock market compared to African Americans.

Younger African Americans also show higher incidence of market investing than older workers and retirees. Automatic enrollment in company retirement plans may be one of the reasons for this shift, but a growing percentage of Black households with incomes of at least $50,000 are now looking to equities and real estate as a primary means of getting ahead.

The Bottom Line

In a recent article, Tyrone Jackson wrote that the availability of free online research and low-cost trading has left antiquated thinking as the only real obstacle for Black investors.

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