By Tiasia Saunders
There has been a rise of Gen Z Black investors in the stock market, which has increased overall Black American wealth.
According to the Federal Reserve, Black Americans primarily accumulate wealth through non-retirement government funds, whereas white families predominantly rely on wages and salaries for their wealth accumulation.
Taryn Young, a sophomore honors finance major from Alexandria, Virginia who started investing last summer, discussed the importance of learning how the market works as early as high school.
“Having [an] education on stocks is crucial because our counterparts learn about investing and the stock market at such a young age, and by the time we learn and begin to invest, everyone else is already two steps ahead,” she said.
“I would recommend for Black students to learn about investing as early as high school,” Young continued.
Resources such as technology advances and increased accessibility play a role in why Black Gen Z’s start to invest.
According to the Financial Industry Regulatory Authority ‘Investors of Color in the US’ report, young investors are embracing higher-risk investments, pursuing motives beyond solely long-term profitability, and depending on social media for investment guidance.
In addition, Black American investors often prioritize investing in Black-owned businesses and enterprises as a means to boost the representation of Black businesses within the economy.
Dr. Maru Etta-Nkwelle, an associate professor and interim chair in the Department of Finance and International Business at Howard University, believes that more Black Americans investing in the stock market would benefit the community.
“As more Black Americans invest in the stock market, we should see more capital flowing into Black-owned businesses and communities, more investment experience gained and shared with families and friends, and more Black investment mentors for Black kids,” she said.
Despite an increase in the number of Black American investors, the racial wealth gap is continuing to grow. According to a Brookings report, in 2022, for every $100 white households had, Black families had $15.
There is also a disparity between white Americans and Black Americans in financial literacy.. Black Americans are more prone to rely on things such as bill payment services, money orders, and check-cashing services, which contributes to financial insecurity.
“The biggest thing that obstructs Black Americans from the stock market is knowledge and access,” said Caleb Smith, a senior marketing major and president of Howard University’s Investment Group from Dallas, Texas.
“If we’re able to reverse this stigma, young Black Americans could start investing at a much earlier age and be many steps ahead when it comes to developing wealth at an early age.”
Investopedia suggests that starting investments at a younger age enables greater compounding of money over time, resulting in a reduced need for contributions during later stages of life.
“What helped me learn about the economy is mainly through reading and talking to people who are knowledgeable in this subject,” said Desmond Daisey, a Howard sophomore finance major from Louisville, Kentucky.
“One of the best things that a person can do to learn about the economy is to put themselves into an environment where the economy is constantly talked about,” Daisey continued.
The increase of Black investors allows the growth of Black businesses and representation in the economy.
“Rising black investments also provide financial security, create opportunities to build wealth, increase participation in the democratic process, and contribute to a reduction in the demographic wealth gap,” said Dr. Etta-Nkwelle.
