Black people have historically shied away from investing in the stock market, but findings from Ariel Investments and Charles Schwab’s 2022 Black Investor Survey discovered there is an significant interest in investing by young Blacks. And these investors aren’t looking to invest in traditional stocks, they are gravitating to making crypto investments.
Black Americans still do not think the stock market offers a fair playing field, but Black respondents were attracted to investments not involving the stock market. “What jumps out is this idea that Blacks trust technology more than they trust people,” says Kelly Johnson, a portfolio manager at Charles Schwab, told Ebony. “Essentially, a third of Black Americans in the survey would rather deal with technology instead of a person.”
The 2022 Ariel-Schwab Black Investor Survey reveals investor participation is at historic lows for both Black and white Americans. In 2022, just 58 percent of Black Americans and 63 percent of white Americans own stocks. This marks a major drop from nearly 20 years ago. In 2002, 74 percent of Blacks invested in the stock market.
Investing in cryptocurrencies was of particular interest for the survey’s respondents.
“We found from this year’s survey that there are some emerging asset classes, crypto being one of them, where people are actually intrigued and jumping on these opportunities,” Arielle Patrick, chief communications officer at Ariel Investments, told Ebony.
One-quarter of Black Americans (25 percent) currently own cryptocurrency, and among Black investors under 40, that figure jumps to 38 percent. Only 15 percent of white investors own cryptocurrency and 29 percent of white investors under 40.
Black investors are more than twice as likely to say cryptocurrency was their first investment (11 percent of Black investors, compared to 4 percent of white investors).
Black investors are less likely than white investors to think that cryptocurrency is a risky investment (68 percent compared to 73 percent). More Black investors believe investments in cryptocurrency are both safe (33 percent versus 18 percent) and regulated by the government (30 percent versus 14 percent). This mindset is even more common among Black investors under 40, with 51 percent believing it is safe and 41 percent believing it is government-regulated. (Cryptocurrencies are not regulated.)
The survey is released every year. “Over the past 24 years, we’ve really spent time with our long-term partner Schwab trying to understand essentially what the barriers to entry might be for Black investors, how the financial services industry can be held accountable to pivot and possibly enhance strategies, so as not to leave money on the table and to foster greater financial literacy for the greater good,” Patrick said.
For 24 years, Ariel Investments and Charles Schwab have studied the investing and saving attitudes and behaviors of Black and white Americans. The 2022 survey compares Black and white survey respondents with an average household income of $99,000 and $106,000.
The survey also found that potential investors are in need of an education about the stock market.
Fifty percent of Americans, both Black and white, are investing in areas that they have not researched or do not know much about.
Adds Johnson, “When we’ve done the survey in the past, Black Americans have tended to be more conservative investors. In a lot of cases, they may be even more conservative than they should be. But I think the larger cultural influence of crypto and NFTs and then having celebrities endorse a lot of these things publicly has pulled a lot of Black Americans into these asset classes and into some of these risky investments without really understanding them.”