In the survey of 501 blacks and 505 whites with household incomes of at least $50,000, nearly half of all blacks (compared to 31% of whites) dipped into savings to make ends meet in the last two years. Additionally, 27% of Blacks who participate in a 401(k) (compared to 16% of whites) reduced the amount they contribute per month. The median amount blacks contribute to their retirement plans is $230 per month, compared to $337 by whites. Of non-retired blacks, 22% (compared to 14% of whites) borrowed or withdrew money from a retirement account. Read more on why you shouldn’t take early withdrawals from your 401(k).
Though overall stock ownership among blacks declined in 2010, for the first time in the survey’s 12-year history more African Americans are choosing stocks and stock mutual funds as the “best investment overall” relative to real estate. Of course, with the high rate of foreclosure, that is not a surprise. Only 30% of Blacks said real estate was the “best investment overall” this year, compared to 41% who picked stocks or stock mutual funds. In 2004, at the height of the real estate bubble, 61% of blacks said real estate was the best investment overall. “We have learned the painful lesson that real estate investing is not fool-proof and are open to new ideas,” says John W. Rogers, Jr., Chairman and CEO of Ariel Investments. “Stocks are cheap and the stock market continues to have great long-term potential.” (Image source: Ariel Investments 2010 Black Investor Study)
African Americans have cut back on spending, especially compared to 2001 levels. Eight in ten African Americans, and seven in ten whites, say they have cut back on spending in the last two years. When the economy hit the skids shortly after the Sept. 11, 2001, terrorist attacks, only about 30% of African Americans and 20% of whites said they had been spending less money. Read more on curtailing spending.
The median amount black households reported saving on a monthly basis is $189, compared to $367 among white households. This is the first time in a decade that African American households have reported saving less than $200 per month. Read more on saving.
Despite being hurt more than whites by the recession, Blacks are considerably more optimistic. Nearly two-thirds of African-Americans believe the economy will turn around within the next two years, while just 50% of whites believe it will take longer than two years for an economic recovery.(Image source: Ariel Investments 2010 Black Investor Study)