Black Investment for the 21st Century

As calls for blacks to invest more aggressively become more insistent, our Board of economists examines the potential for building wealth in the new millennium

they were investing for retirement,” says Hobson. “For blacks, the No. 1 reason was their children’s education.”

Says BEBE’s Thomas Boston, “If in fact that’s different, then it has implications in terms of people’s willingness to tolerate risk. If I’m trying to plan for my kids future education, then I’m going to behave in a more cautious manner than if I wanted to accumulate capital for individual reasons,” he suggests. “It’s important to look at all of the demographic differences within the context of different income and the life cycle of blacks and then design strategies that address these differences. Trying to superimpose a wealth profile on blacks that looks identical to a wealth profile of whites will not work,” he explains.

“But,” adds Swinton, “this business of trying to shift the savings/investment function, if we can do that, it would have important implications for the future of our group,” he says. “That’s not an easy thing to do. But if we can actually shift the preference function so that everybody invests a different amount at each income level, then maybe we can begin creating this wealth stockpile we’ve been talking about.”

Adds Earl Graves Jr., “The gap in our wealth difference is becoming larger and larger. At some point if you’re not in it, you’re going to be left further and further behind in the larger equation. Yes, we may be going through a broader fluctuation in the stock market right now, but over a long period of time, as has been proven over the last 50 to 60 years, an investment in the stock market is the best return that you can have as an investment over any other type of investment.”

AN EARLY INTRODUCTION TO THE MARKET
Whether it
‘s truth or fiction, it’s difficult to say-but the perception is that discussion of the stock market, investment strategies and other assorted financial issues is common table talk in the households of most whites. The perception is also that the subject is a rare visitor in the households of most blacks that may be more concerned with simply making ends meet.

Economist Cecilia Conrad believes a key to getting African Americans comfortable with the market is an early introduction. “We have to think about getting people involved very early and that’s partly a marketing strategy issue. Many of my white contemporaries got their first stock or investment in equities when they were 11 or 12 years old. Some got them as Bar Mitzvah presents,” she says. “That’s critical-getting people in the habit of thinking about all these different alternatives at a very young age.”

Once that introduction is made, a commitment to becoming long-term investors must be made, adds BEBE’s Lucy Reuben. Those looking for a quick hit or instant jackpot must understand large scale earnings generally only come over long investment spans. “We must realize the importance of investing for a longer period of time early in the high risk/ return securities. That’s a lesson for the young that they’ve got to get,” she

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