In April 2021, Bank of America data showed that Americans invested over half-a-trillion dollars into equity funds in the first five months of the year, which was more money than the past 12 years combined. This massive summ, likely excluded investors from Black communities in the U.S. Because, although more people are becoming interested in investing, people of color are not investing at the same rate.
A CNBC/Momentive Invest in You survey found that “half of Black U.S. adults and 49% of Hispanics don’t currently own individual stocks, mutual funds, bonds, exchange-traded funds, cryptocurrency or real estate.” Further, “59% of Black women aren’t invested in anything, compared to 48% of Hispanic women, 34% of white women and 23% of white men.” In terms of retirement savings, almost “twice as many white men (63%) own a retirement account as Black women (32%), and only 33% of Black men have a retirement account.
There are many factors that can hinder people in these communities from freely investing.
- First, the ability to participate in the stock market is typically based on the amount of a worker’s disposable income.
- A McKinsey report found that the average annual wage for Black workers is around 30% lower than their white peers, and over three million Black households have a negative net worth due to debts.
Getting an early start about investments can play an important role in helping to establish generational wealth among families of color. In addition, actively learning how the process works with a guided practice of early investment can teach financial discipline, help gain financial independence, and allow people to achieve short- and long-term financial goals, according to Forbes.
Robert F. Smith’s Work to Help Young Black and Latinx Students Invest
Robert F. Smith is passionate about helping people of color achieve financial freedom. In October 2021, Smith partnered with financial app Goalsetter to announce an initiative dedicated to turning one million Black and Latinx Americans into shareholders. To bridge the wealth gap across underserved communities Goalsetter challenges corporations to donate a minimum of 1,000 shares towards the initiative, who will then distribute shares to Black and Latinx teens across the country. The students are then guided by Goalsetter through the investment process.
Smith helped launch the initiative by gifting nearly 15,000 shares of stock to students and faculty at Eagle Academies for Young Men, a network of public schools serving young men of color in New York and New Jersey.
Since its launch, leading Fortune 1000 companies have already donated 1,000 shares each, including Comcast NBCUniversal, Delta Air Lines, Lyft, Twitter and UBS.
Besides Smith, learn more about Goalsetter’s notable investors, including NBA players Kevin Durant and Chris Paul as well as actor Sterling K. Brown.