Breaking Down Barriers: How Black Americans Are Overcoming Obstacles to Achieve Financial Security
Historically, black people in America have been excluded from many financial opportunities, mostly due to the burden of racism and discrimination. As a result, there are several types of financial assets that have been overlooked or ignored by the black community.
Some of these obstacles came in the form of discriminatory lending practices, redlining, and limited access to quality financial education just to name a few that have prevented the community from building wealth and achieving financial security. Nonetheless, there has been a growing movement of black Americans in recent years who are utilizing financial resources that were previously disregarded. We are discovering new avenues for wealth creation and barrier-breaking, from equities and real estate to entrepreneurship, life insurance, and cryptocurrencies.
The stock market has long been a key avenue for building wealth, but for many years, black Americans did not have the same access to investment opportunities as their white counterparts. According to a study by the National Bureau of Economic Research, black households are 60% less likely than white households to hold any stocks at all, and among those who do invest, they tend to hold a smaller proportion of their portfolio in stocks than white households do (1).
However, in recent years, the rise of online investing platforms and the increasing availability of financial education resources has made it easier for black Americans to invest in the stock market. One example is Robinhood, an online investing platform that has become popular among young people, including black investors. According to a survey by the Robinhood Foundation, black Americans are more likely than other racial groups to use Robinhood to invest in individual stocks (2). This suggests that they are increasingly turning to technology to access investment opportunities that were once out of reach.
Another example is the Black Investor Survey, which was conducted by Ariel Investments and Charles Schwab. The survey found that black investors are more likely to invest in individual stocks than in mutual funds or exchange-traded funds (ETFs), and they tend to hold onto their investments for longer periods of time (3). This suggests that black investors are taking a more hands-on approach to their investing and are not just relying on passive investment strategies. An additional result of a survey conducted by Ariel Investments and Charles Schwab showed that the percentage of black investors in the stock market increased from 57% in 1998 to 67% in 2018. This is a significant increase, indicating that more black Americans are investing in the stock market.
Homeownership has long been considered a key part of the American Dream, but black Americans have historically faced significant barriers to owning property. Discriminatory lending practices, redlining, and zoning laws that prevent the development of affordable housing in predominantly black neighborhoods are just a few of the obstacles that have prevented black Americans from achieving homeownership.
However, in recent years, there has been a growing movement of black Americans who are working to create opportunities for the community to own property and build wealth through real estate investment. One example is the Black Real Estate Investors Network, which was founded by real estate investor Paul Moore. The network provides educational resources and networking opportunities for black real estate investors, with the goal of helping them build wealth through real estate investment (4).
Another example is the work being done by the National Association of Real Estate Brokers (NAREB), which was founded in 1947 to promote equal access to housing for black Americans. In recent years, NAREB has focused on increasing black homeownership by partnering with lenders and other organizations to provide education and resources to black Americans who want to buy a home (5).
Cryptocurrency is a relatively new asset class that has gained popularity in recent years as an alternative to traditional currencies and investments. However, black Americans have been historically underrepresented in the technology industry, which has led to a lack of access to and knowledge about cryptocurrency.
Despite this, there are several organizations and educational resources aimed at increasing black participation in the cryptocurrency market. One example is Black Bitcoin Billionaire, a community of black cryptocurrency investors and enthusiasts that was founded by Lamar Wilson. The community provides education and resources to help black Americans understand and invest in cryptocurrency (6).
Another example is the work being done by the Black Blockchain Coalition, which is focused on increasing diversity and inclusion in the blockchain industry. The organization works to provide educational resources and networking opportunities for underrepresented groups, including black Americans, with the goal of increasing their participation in the industry (7).
Entrepreneurship has long been considered a path to financial independence and wealth creation, but for many years, black Americans faced significant barriers to starting and growing their own businesses. Access to capital, discrimination in lending, and limited access to business education and mentorship were just a few of the obstacles that prevented black Americans from pursuing entrepreneurship.
However, in recent years, there has been a growing movement of black entrepreneurs who are taking advantage of new opportunities to start and grow their own businesses. One example is the Black Women's Business Collective, a community of black women entrepreneurs that provides resources, education, and support for black women who want to start and grow their own businesses (8).
Another example is the work being done by organizations like the National Black Chamber of Commerce (NBCC), which was founded in 1993 to promote economic empowerment and entrepreneurship among black Americans. The NBCC provides resources and advocacy for black-owned businesses, with the goal of helping them succeed and grow (9).
One of the key barriers that black Americans have faced when it comes to building wealth is a lack of access to quality financial education. Many members of the community have not had the opportunity to learn about investing, budgeting, and other important financial skills, which can make it difficult to achieve financial security and build wealth.
However, there are several organizations and resources that are working to increase financial literacy among black Americans. One example is the Hip Hop Financial Literacy program, which was founded by financial expert Ash "Cash" Exantus. The program uses hip hop music and culture to teach financial literacy to young people, with the goal of increasing their financial knowledge and skills (10).
Another example is the work being done by the Financial Planning Association (FPA), which has launched several initiatives aimed at increasing diversity and inclusion in the financial planning industry. The FPA provides education and resources to help black Americans learn about financial planning and investing, with the goal of increasing their access to quality financial advice (11).
In addition to the assets and resources discussed earlier, permanent cash value life insurance, estate planning, and trusts are also becoming more widely used in the black community as tools for wealth building and preservation. Life insurance policies with cash value components can provide a source of savings and investment for policyholders, while also offering a tax-advantaged way to transfer wealth to future generations.
Estate planning and trusts can also help black Americans protect their assets and pass them on to their heirs in a way that minimizes taxes and maximizes their impact. These tools can be particularly valuable for the communities that have faced systemic discrimination and may have had fewer opportunities to accumulate wealth through traditional means like stocks and real estate. By taking advantage of these tools, black Americans can build and preserve wealth for themselves and their families, helping to close the wealth gap and create a more equitable financial system.
Despite the barriers that black Americans have faced when it comes to building wealth and achieving financial security, there is a growing movement of people who are taking advantage of new opportunities and assets to break down these barriers. With the help of educational resources and supportive communities, black Americans are proving that they can overcome many of the obstacles that have held the community back for too long.
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1. Gittleman, M., & Wolff, E. N. (2004). Racial Differences in Patterns of Wealth Accumulation. The Journal of Human Resources, 39(1), 193-227.
2. Robinhood Foundation. (2019). Robinhood Diversity & Inclusion Report.
3. Ariel Investments & Charles Schwab. (2020). Black Investor Survey.
4. Black Real Estate Investors Network. (n.d.). About Us.
5. National Association of Real Estate Brokers. (n.d.). About NAREB.
6. Black Bitcoin Billionaire. (n.d.). About Us.
7. Black Blockchain Coalition. (n.d.). About Us.
8. Black Women's Business Collective. (n.d.). About Us.
9. National Black Chamber of Commerce. (n.d.). About Us.
10. Hip Hop Financial Literacy. (n.d.). About Us.
11. Financial Planning Association. (n.d.). Diversity and Inclusion.
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