First, Some Good News. The 2002 Ariel Mutual Funds/ Charles Schwab & Co. Inc. Black Investor Survey found that 74% of high-income African Americans (those earning more than $50,000 a year) own stocks or stock funds. That’s up sharply from 57% in 1998, an impressive advance in the face of a vicious two-year bear market.
Now, for the grimmer side of the story. The same survey found that black investors still trail whites in investments. More important, African Americans lag sharply when it comes to net worth. According to our research, black’s net worth is 10% of their white counterparts.
“African Americans must be educated that wealth is not defined by income but by net worth — the difference between what you own and what you owe,” says Darryl T. Owens, a county commissioner in Louisville, Kentucky. “A big paycheck is not wealth.”
To help spread the word, Owens and the organization he founded, the African American Strategic Planning Group (www.aaspg.org), organized a “What Are You Worth?” symposium in Louisville this past May. It offered nine workshops on topics ranging from budgeting to retirement planning. Nearly 200 African Americans, mainly from the area, attended the daylong affair, paying a $25 fee. “We hope to have another conference next year, reaching out to African Americans statewide and expand to a regional conference in a few years.”
Although Owens and the AASPG have grand ideas, you can spread the word about wealth on a much smaller scale. Here we focus on DOFE principles 4 and 10, which both emphasize the importance of net worth. Below are ways to help your neighbors build wealth and pass it on to future generations.
GO TO CHURCH
Local churches are ideal to preach the gospel of economic empowerment. “Instead of focusing on one church you might get two or three to work together, as long as they each have a significant membership,” says Owens. “The seminar could be announced to the church members, who would be asked to bring other people from the community as well.”
JOIN THE CLUB
At Owens’ symposium, many participants expressed interest in investment clubs. These clubs are fitting forums for educating African Americans about wealth building. “We believe investment clubs are a powerful way to get people involved in investing to gradually build experience and confidence,” says Carla Arnold Foster, vice president of specialized segment marketing at Charles Schwab in San Francisco. “When people new to investing get together and exchange information, they can get their questions answered, share experiences, and build confidence in themselves and in the investing process.”
ASK FOR ON-THE-JOB TRAINING
Mellody Hobson, president of Ariel Capital Management in Chicago, says that the workplace may be an excellent place for disseminating financial information. “That’s where people talk about money,” she says. “It is especially important that African Americans contribute as much as possible to their 401(k) plans to build up adequate retirement funds. In addition, participants should avoid being too conservative in these plans to attain higher long-term returns.”
The catch, according to Hobson, is that many companies’ 401(k)