of the wealth of a white family. The most recent data from the U.S. Census Bureau showed that the median net worth of blacks was only $4,418 compared with $45,740 for whites. Among the middle class, the figure improves. Now a typical black family possesses on average 25% of what a white family does. The factors contributing to this phenomenon: government policies that make it easier for whites to acquire property and other assets; a history of obstacles that African Americans, unlike many immigrant populations, have faced to building wealth and starting businesses; and the cumulative effect of years of discrimination.
On the next few pages, we will reveal to you a series of steps that will enable you to get out of the starting blocks, engage in a point-by-point process to gain knowledge, make a binding commitment to your financial and business goals and establish a disciplined approach to wealth creation.
AN ENVIRONMENT FOR WEALTH CREATION
The ’90s were marked by the longest economic expansion in peacetime America. Over the past several years, the economy has boomed, and although the go-go years show signs of slowing down, the most recent data reveal the economy growing at a robust 4.8% clip. Forecasts Andrew Brimmer, the former Federal Reserve governor and a member of the be Board of Economists: “On balance, I see the overall economy expanding somewhat more slowly, but still operating at a rate well beyond the long run, sustainable level.”
The economic engine has been lubricated, for the most part, by the stock market. Despite its peripatetic nature, it has tripled in value over the past three years. So many Americans are in
vested in the market and glued to CNBC these days that some economists have dubbed the nation “the stockholder society.” A new study conducted jointly by the trade groups Securities Industry Association and Investment Company Institute reveals that a record 48% of American households own stocks, and that stocks comprise 35% of all household financial assets. The median stock holding for those under 35 is $11,900 and, for those age 64 and older, $62,500. In employer retirement accounts, 61% of the typical account is invested in stocks. In fact, from 1990 to 1998, mutual fund retirement assets grew from $206 billion to $1.86 trillion, and retirement holdings, as a share of total fund assets, grew from 19% in 1990 to 34% in 1998. As you may have guessed, nearly 50% of stockholders are baby boomers, the oldest of whom are just 11 years from retirement. Because of these demographics, experts predict that after factoring in occasional corrections, the bull market can very well thrive until at least 2008.
The major storm cloud on the horizon of this otherwise optimistic scene is that although Americans are investing in historic proportions, they are not saving enough. Since 1997, households have sold $1.3 trillion in stocks, including exercised stock options. After reinvesting nearly half in mutual funds, $700 billion was used to splurge. And SMR Research Corp. reported that mortgage refinancing and home