Don’t Let the Bull Market Pass You By

One survey suggests that black investment in the stock market is lagging. Is a wealth-building opportunity being missed?

As the Dow Jones industrial average continues breaking barriers on its way to the 10,000 mark, there may be growing interest in breaking down the obstacles that have kept African Americans from becoming more active in the stock market. Although the market’s phenomenal bull run over the last four years has helped create many millionaires, it appears African Americans are taking less advantage of the market’s wealth-building potential than their white counterparts. When the Dow reaches 10,000, will African Americans be as enthusiastic and economically enriched by the event as whites?
A recent survey commissioned by Ariel Mutual Funds (312-7260140) and Charles Schwab & Co. (800-435-4000) identifies the differences between black and white investors, as well as the factors that will encourage blacks to invest more. The survey of 500 blacks and 732 whites, with household incomes of at least $50,000, reveals a range of attitudes and other factors about how African Americans view investing and the financial services industry. Some key findings from the survey are:

As investors, 63% of African Americans describe themselves as conservative, compared to 53% of whites

The majority (57%) of African Americans have money in the stock market, with 43% saying that stocks or bonds are the best investment overall. Real estate was judged the best investment by 46% of African Americans.

More than one-third of African Americans (38%) say their lack of knowledge about investing is a major reason they do not save or invest more; 20% reported that not being able to trust the advice of investment advisors was also a major reason.

Most blacks said they are more likely to invest with a company that is racially diverse (58%) or with an investment firm or mutual fund owned or managed by African Americans (57%).
Officials at both Ariel and Schwab believe the survey findings make a case for reaching out to the African American community with more information about investing. “The most important thing that the survey revealed was that black Americans are just as bullish as white Americans,” says Mellody Hobson, Ariel senior vice president, director of marketing. “We can take that bullish attitude and turn the underinvestment by blacks into a real opportunity.”

Carla Arnold, vice president of branch marketing for Charles Schwab, agrees. “This is an opportunity for the entire industry. As African Americans become more interested in investing, we will benefit, our competition will benefit and the African Americans who participate in all this wealth-building will benefit.”

As a first step in reaching out to and educating African Americans about investing, Ariel and Schwab teamed up with the Coalition of Black Investors (888-411COBI) to co-sponsor a series of investor education seminars in April. Arnold says, “The seminars focused on education–we were not pushing product.” She believes efforts such as these give Schwab a chance to “connect with the African American community [and] correct some of the misconceptions about investing.”

Unfortunately, it may take more than dispelling misconceptions to get African Americans to realize the true potential of investing and thereby approach the success of their

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