A new survey finds that young black Americans now invest in stocks at the same rate as whites:
In a year like no other, however, there is also evidence of growing engagement in the stock market by younger Black Americans, with 63 percent under the age of 40 now participating in the stock market, equal to their white counterparts. The closing of this gap among younger investors is being driven by new investors: three times as many Black investors as white investors (15% vs. 5%) report having invested in the market for the first time in 2020.
Stocks are a major vehicle for wealth creation, and black Americans have long been less involved in the stock market than whites:
A majority (61%) of non-Hispanic white households own some stock, compared with 31% of non-Hispanic black and 28% of Hispanic households. Median investments vary here as well: Among whites the median is about $51,000. By comparison, the median for black families is $12,000, and for Hispanic families it is just under $11,000.
Behind this growth is a huge increase in the use of stock trading apps like Robinhood and Webull. Downloads in the last year are up 157% and 371% respectively. For all their faults in enabling speculation, these apps also seem to be opening up opportunity. The minimum investment in Vanguard’s S&P 500 index fund is $3,000, for example. This is far out of reach for many young people, particularly minorities. Meanwhile, Robinhood allows users to buy fractions of a share of stock for as little as $1. Webull has no minimum at all.
I’m happy to see more people get an opportunity to be a part of this amazing capitalist wealth creation system of ours. More people benefiting from our system helps preserve it. And more people getting rich makes me smile.
Have a great weekend everyone!
Dig into these posts for more on markets:
- The Unstoppable Wave Behind Stocks
- This Is How Vlad Tenev Built Robinhood
- This One Trend is Driving Every Financial Market
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Photo: Black Wall Street Durham, NC