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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 stayed flat.

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 51 percent.

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.


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