Young Black investors are taking initiative in the stock market.
“You’re seeing topics of money and investing coming up at the dinner table slightly more among Black families than they had ever before,” Arielle Patrick, chief communications officer at Ariel Investments, told The Wall Street Journal.
The rise was credited to the aftermath of the COVID-19 pandemic, which shifted different financial habits for Americans and led to the first investment in the stock market for some.
“It created a whole generation of investors,” Anthony Denier, CEO of mobile brokerage Webull U.S, said, according to the outlet.
It is important to note an alarming trend reported by Ariel Investments and Charles Schwab among Black and white investors. While it does appear individuals are energized when it comes to investing, there also appears to be a lack of education surrounding those investments, according to the study. In fact, 47% of Black investors and 45% of white investors reported they had invested their money in a sector where they lacked a full understanding.
Black investors also mentioned they were more likely to inform their investment decisions based on sources that are less credible. As a matter of fact, 33% of Black investors linked their investment interest to information found on social media — a number higher than that of white investors, which was less than 25%.
“The confluence of low stock market participation, appetite for risky investment options, and alarming lack of knowledge about fundamental investing principles is a red flag about the critical need for greater investor education,” Mellody Hobson, co-CEO and president of Ariel Investments, said in the study. “Many new and younger investors have never experienced market volatility like we’ve seen in the last couple years, and we have a responsibility to educate these new investors about the value of long-term investing to build wealth and achieve financial security.”