June 11, 2001
Stock Ownership Increasingly Black and White
by Mark Thomsen
Survey finds stock ownership among African-Americans is increasing while ownership among Whites has
In an annual study of African-American and White investors, results showed that 69 percent of
Blacks surveyed owned stock, up from 64 percent last year. Stock ownership by Whites remained
unchanged at about 80 percent. This fourth annual survey of Black and White stock ownership was
jointly conducted by investment firm Ariel Mutual Funds and financial services giant Charles Schwab
& Co., Inc.
“Clearly there is growing comfort with stock investing among
Blacks,” said Michael DeFlorimonte, Schwab’s Vice President, African-American Investor
Services. “Wealth-building is an area where our community is striving to catch up, and all of
the trends are positive.”
The survey was conducted in January and February and
polled 500 Blacks and 500 Whites earning over $50,000. The survey also found that the percentage
of African-Americans who have “most of their assets at a brokerage or mutual fund
company,” as opposed to banks or insurance companies, has climbed steadily from 26 percent in
1998 to 37 percent today. The correlating White percentage has been flat over four years at about
The survey this year differed from previous surveys in that it tried to look
at the key factors driving investment behavior in each group. Interestingly, results revealed that
income levels were the single most significant factor motivating African-Americans to invest, while
age was the biggest determinant for Whites.
Specifically, the 2001 survey shows that
African-Americans earning six-figure salaries are almost three times as likely to be investors as
Blacks earning below $75,000. Moreover, at income levels of $100,000 and above, the percentage of
Blacks who own stocks is statistically equal to Whites. Among Whites, six-figure earners are only
twice as likely to own stocks as those under $75,000.
When looking at age, the survey
shows that Whites are most likely to begin investing once they reach their late thirties and early
forties, regardless of how much they earn. In fact, Whites between the ages of 35 and 44 are
almost three times more likely than Whites under 35 to be investors. By comparison, age is not as
significant a factor for Blacks. With the exception of Blacks over 65, the percentage of those
owning stocks does not differ dramatically by age group.
One of the long-term goals of the
survey, according to Ariel and Schwab, is to delineate the role of family and culture in shaping
African-American investment behavior.
“Schwab and Ariel have long recognized that a
tremendous opportunity exists to empower Black investors,” said David Pottruck,
Schwab’s president and Co-CEO. “Together, we’re helping to identify investment
barriers that are unique to African Americans and provide this community with the tools they need
to build wealth.”
Despite the gains in stock ownership, after controlling for
various external factors, the survey found that African-Americans are still 35 percent less likely
to be investors than Whites. Ariel President Mellody Hobson believes more work has to be done to
change people’s mindset.
“Saving and investing is something everyone needs to
do regardless of how much they earn, even if they start out very small. If you don’t grow up
with stocks, you think of it as only for wealthy people. That’s why education is so
important for our community,” Hobson said.