The stock-investing bug bit Five Points resident Stephanie Cross when she was in her early 20s. She signed up for a retirement plan at work.
Cross went on to help organize a stock-investing club with 15 African-American women and survive a bear market. She continues to spread the word about stocks, including to her young daughter.
“In the past, information wasn’t available to us or shared with us,” Cross said. “We may be behind the curve, but we are catching up quickly.”
Having a retirement plan at work makes a big difference in whether black households own stocks, according to the eighth annual Ariel-Schwab Black Investor Survey, to be released today.
“Employer retirement plans do help level the playing field in a remarkable way,” said Carla Foster, a vice president at Charles Schwab & Co.
Each year, Schwab and the Chicago money manager Ariel Capital Management survey 500 white and 500 black households earning $50,000 or more. They’re measuring the gap in stock ownership based on race.
This year, sixty-five percent of black households surveyed owned stocks compared with 80 percent of whites.
Only 45 percent of the black households surveyed said they consider saving for retirement a top priority compared with 60 percent of white respondents.
But when retirement saving is a priority, as it is with Cross, African-Americans are more than twice as likely to be stock investors. Whites are equally likely to invest in stocks regardless of why they are saving.
“A lot of us in the African- American community didn’t grow up talking about the stock market around the dinner table, but now we are talking about it around the water cooler,” said Mellody Hobson, president of Ariel Capital.
Even with comfortable incomes, blacks still favor life insurance and real estate over stocks, Foster said. When asked to list “the best investment overall,” 54 percent of blacks surveyed said real estate compared with 39 percent of whites.
“I can see real estate, and I know what it is,” said James Johnson, a corporate recruiter in Oklahoma who helps organize stock investment clubs.
Investing in something as intangible as a stock requires “a greater belief in not only the company, but the American economy,” he said. But novices who learn about stock investing and who make systematic investments over time can build greater wealth.
Even after the recent run-up in home prices, stocks have averaged returns of 10 percent a year and real estate 7 percent since 1926, according to Ariel.
Denver is home to about 62,400 African-American residents, 11.3 percent of the city’s population in the 2000 census.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
