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According to a new survey, more black Americans will become first-time investors in 2020 than in any previous year, with the majority of the growth coming from the under-40 age group.

According to the most recent Ariel Investments-Schwab Black Investor Survey, there was 15 percent of new black investors in the past year, compared to only 4 percent of new white investors, according to the survey.

Carrie Schwab-Pomerantz, a financial analyst at Yahoo Finance Live, stated that the growing interest in the stock market among younger blacks may aid in closing the wealth gap. Younger black investors outnumber their white counterparts under the age of 40, according to Schwab-Pomerantz, who estimates that the two groups are nearly equal in number.

Black Americans are talking more about money these days, and about all elements of it, including debt, college costs, and the stock market. That, she explains, is the beginning of financial stability since it “demystifies some of the vocabulary used in the context of money.”

When it comes to accumulating wealth, blacks lag behind whites.

The survey indicates that, while younger blacks have expanded their participation in the stock market over the past several years, blacks are still lagging behind their white counterparts when it comes to accumulating wealth in general. According to the results of the survey, only 55{ed128cd433bbc4517f50fb13ce34d1a6ed6ee0bfab1b878224d80b604512994b} of black Americans own stocks, compared to 71{ed128cd433bbc4517f50fb13ce34d1a6ed6ee0bfab1b878224d80b604512994b} of white Americans who own stocks.

Her research indicates that the compounding effect of this investing disparity could have a negative impact on Blacks’ retirement savings as well as their ability to pass along wealth to the next generation over time, she says. Despite the fact that black and white people contribute about the same amount to retirement plans (53 percent against 55 percent), a poll finds that white people contribute more per month. Black Americans make an average investment of $231, compared to their white counterparts who make an average investment of $291.

A total of 12 percent of black investors, compared to only 5 percent of white investors, stated that the COVID-19 pandemic prompted them to borrow against their retirement plans as a result of the epidemic.

One more disheartening indicator is that only 35{ed128cd433bbc4517f50fb13ce34d1a6ed6ee0bfab1b878224d80b604512994b} of black investors believe they are treated respectfully when speaking with a financial advisor. As Schwab-Pomerantz pointed out, this is an issue that the industry must address in order to ensure that everyone has equal access to resources for the purpose of investing.

“Our research also revealed that black investors prefer to collaborate with a company that has some amount of racial diversity,” she added. “All we want to do is make certain that everyone gets the tools and knowledge necessary to be successful investors for the rest of their lives.”

The Ariel-Schwab Black Investor Online Survey had 2,104 responses, with 1,007 participants identifying as black and 1,097 people identifying as white, according to the results. All of the respondents were over the age of 18 and had a family income of $50,000 or more in 2019.

Camari Ellis

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