Screen Shot 2016-02-04 at 9.42.55 AMBlack Americans have generally steered clear of the stock market and consequently many with solid incomes have lagged far behind whites in accumulating wealth. But the tables are starting to turn. A national study by Chicago-based Ariel Investments. Currently, 67 percent of African-Americans with incomes of at least $50,000 have money invested in stocks or stock mutual funds. In 2010, that percentage was about 60 and in 1998, it was 57 percent.

During the last few years, employers have been enrolling their employees automatically in 401(k) plans without seeking permission first. As a result, employees have ended up with stock and bond investments that have been growing during the bull market that began in 2009.

In 1998, 81 percent of whites were investing in the stock market. Now 86 percent of whites with incomes of at least $50,000 have stock or stock fund investments — the highest level Ariel has ever found.

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Black Americans continue to be more leery of the stock market than whites. When Ariel asked people who weren’t investing in the stock market to cite a reason, 56 percent of blacks and 53 percent of whites said it was too risky. Having enough money to invest was secondary, with only 44 percent of blacks saying that was the reason for not investing.

Black Americans are more likely than whites to say it’s important to get the timing right for stock market investing, although financial advisers say the key is to combine stocks and bonds and invest a little at a time continually. They say guessing when stocks will climb or fall is impossible even for the best and brightest pros.

More than half of black investors said workplace plans were the most important motivator for becoming an investor.

Meanwhile, after going through the financial trauma of the last few years, both blacks and whites have greatly changed expectations about when they will retire, though blacks are more optimistic. In 2003, 42 percent of blacks and 28 percent of whites thought they’d retire before age 60. Now, only 17 percent of blacks and 10 percent of whites think they will.

Do you own stock? What are your thoughts on the stock market and investing as a whole?

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  • [email protected]

    People have the right to invest. Like any endeavor, anyone who wants to invest, have the justification to get advice from multiple financial experts. Getting help is always a wise policy. Investing a little at a time in the beginning is fine as well. The should be a Plan A, B, C, etc. when doing any economic trading or organizing mutual funds. Using wise decision making is important because the Great Recession started in part because of risky trading and other bad policies by corrupt Wall Street bankers. Another great point ought to be conveyed too. It is always necessary for us to pass down our wealth and resources to the future generations of black people.

    Life is not just about ourselves. We desire not just a group of upper middle class plus rich black people to have economic growth. We want all black people, irrespective of class, to have economic justice. We live our lives, so hopefully the future can be better than the past and the present. So, we have to use creative strategies in fighting poverty in the black community, and passing down our resources to future generations. We want community growth without evil exploitation. In other words, human beings can’t live by bread alone. We have to live by integrity, honor, humane treatment, and social justice.

    • Noirluv45

      Right, Truth. Making wise and educated decisions is one of the many keys to good stock investments.

    • [email protected]

      Exactly.

    • [email protected]

      and do your research, and don’t fall in love with a stock, know when to sale and jump off of a sinking ship.

    • eLLe D.

      YES!

    • [email protected]

      Right on Sister.

  • Chazz A

    Great article.

    I own shares in 11 large cap and 3 small cap companies. I have been purchasing stocks for 18 yrs., although I’m not as risky as I was in the late 90s. I learned a valuable lesson during the dotcom bubble burst, so I tend to maintain a large percentage of my portfolio with well established companies.
    Anyone interested in stock investing should use caution and thoroughly research the company’s trade and financial history. Try to avoid small cap start ups or fly-by-night Tech companies that lack a trading history. Set up a portfolio online (I use e-trade}, it will save a lot of time and hassle spent dealing with “human” stock brokers. Avoid hot stock tips from co wokers, bloggers and mad money maniac Cramer. I rely on up to date stock analysis from professional analyzers who are in the business of stock analysis, not selling books or hosting TV shows..
    When purchasing shares, try not to use “pocket money”, if possible. Meaning, the money from your paycheck. For example, I often buy additional shares with my tax refunds and other extra income.
    Some people I know had jokes when I told them I invest my tax refunds instead of buying “stuff”. They wouldn’t laugh much if I showed them my portfolio.
    The most important advice is to research the stock’s PE (price/earnings ratio) compared to the PR (projected return). The formula is;
    market price per share divided by annual earnings per share. If the P/E ratio is high, more than double the return, then the stocks’s purchase price is grossly inflated. I’ve lost money in the past by failing to research this before buying stock.
    Lastly, its never too late to invest in stocks.

    • eLLe D.

      Great advice! Thanks Chazz.

    • Chazz A

      You’re welcome Elle D

    • Anonin

      Interesting. Thanks for the info! I don’t understand stocks but it’s something I might be interested in the future.

    • Chazz A

      You’re welcome, with a host of info online, you will be a pro in no time.

    • [email protected]

      “I tend to maintain a large percentage of my portfolio with well established companies.” Amen Chazz A, I learned that the hard way along with don’t fall in love with a stock, know when to sell, and as you said avoid the pump and dump. do your research, do not go down with a sinking ship because I lost money on two company that went bankrupt and one I knew they were having problems and I held on too long.

    • Chazz A

      Exactly trueletterson. When I was a novice I lost money as well trying to hold on and ended up crashing with the stocks. Now in my older age I’ve learned the importance of research, patience and diversifying. I’ve become a Nasdaq fiend lol

    • [email protected]

      I feel you, right now I am just holding what I got which is mainly down to 8 large cop companies and one very cheap company [Alcatel-Lucent’s] that was in the news lately that I bought a chit load hoping I would hit it big because it was very cheat and I knew something about the company, but as of today not much movement. man this is music to my ear I very rarely meet a black men who trade in the stock market.

    • Chazz A

      No doubt, I’m laying low myself. I was hoping Chipotle’s stock would tank low enough to jump on with all of the trouble as of late. But they are still trending around 480!
      Its always good to see other black people trading stocks.

    • [email protected]

      I will keep my eye on Chipotle if it falls below $50 [which is highly unlikely] I might bit, yep it very rare to see other black people trading stocks and I think that’s why I lost interest in trading because when I retired I had no one to talk to that was interested in the stock market, when I was working I had a few white co worker I could talk to and trade tips with, but you know what when I hear black folks say “black folks don’t own anything” and “and black folks don’t own any corporations” I say to myself the way the world works now you don’t have to start a company to have ownership, you can invest in a company and have ownership and create some wealth, I know three guys right now, three working class brother who are millionaires though their stock holdings, but they don’t trade, they bought stock when they was working [they use their overtime on special projects 25 years ago and invested it, a smart move] mainly in the same industry they worked in years ago when it was cheap now after their stock has split several times their children stand to inherit a nice piece of money, because these guy are stingy and don’t spend much money LOL…but though 401Ks and wise investment black people can have ownership in corporation and start building generational wealth, and I say that because due to my trading when my sons finish college and started their careers now they invest and trade but a funny thing they trade tips among themselves friends and co workers but hardly ever give dad a tip, now ain’t that something LOL…. Peace.

  • [email protected]

    I have had a brokerage account for over 15 years I have made some money buying and selling stocks and I must be honest I have lost money buying and selling stocks, my biggest lost was Circuit City, Kmart and a mutual fund I can’t remember right now, however I must say I have made more money than I lost either way the government will be waiting to get it share.

    • Chazz A

      I feel your pain, been there myself. Look at it like this, at least you were taking a calculated risk in an effort to increase your upward mobility unlike those that flood those same stores during the holidays, driving themselves into debt.
      Good luck in your 2016 portfolio expansion!

    • [email protected]

      good luck to you Chazz A I will be hitting you up on a few tips soon.

    • Chazz A

      No doubt brother, peace!