The Racial Wealth Gap: Do Most Black People Really Care?
Do most black people even care about closing the wealth gap? In my humble opinion, I would have to answer no. Why do I say that? Think about it. You cannot expect your own kids to be good at something if you care more about it than they do. They have to care; they have to take an interest. The same principle holds true here. If black people do not care about closing the wealth gap, then why should anyone else. I feel that the wealth gap in this country should not be as wide as it is. Simply put, if black people would just take the time to get educated about the same types of investment vehicles and investment strategies as white people, we might have a chance to narrow the wealth gap. While white people are investing in stocks, mutual funds, bonds, and real estate investment trusts, black people are investing in savings accounts, bank CD’s, cars, and jewelry. I would like to use the term “instant gratification."
Black people are much less likely than white people to buy potentially high-return assets such as stocks and real estate investment trusts. If black people bought high-return assets at the same rate as white people, the wealth gap just might start to decline. But for the most part, that is not going to happen because we simply don’t care enough about the wealth gap. Educating African Americans about potentially high-return investments has been nothing short of a task. I feel that black people have too many other pressing concerns that take precedence over learning about wealth building or teaching it to their children.
Here is something that might help. Try going to an actual wealth building seminar about investing in high-return assets such as stocks, bonds, real estate, real estate investment trusts, and entrepreneurship instead of workshops teaching about savings accounts, credit repair, and bank CD’s. Just a passing thought.
Just how big is this wealth gap? The median net worth for blacks is around 8 percent of the median net worth for whites. One of the big reasons for that is our investing and/or wealth building strategies. Let’s face the facts. Investing and wealth building is not exactly dinner table conversion in the majority of African American households. White and Asian families are considerably more likely to have those types of conversations with their kids.
Most white people understand that savings kept in relatively high profit potential investments naturally accumulate faster, particularly when the markets are doing well. Black people are too busy looking for savings accounts that are guaranteed or investments that have zero chance of loss (which, by the way, does not exist). I have seen seminars about investing and wealth building that has far more white people in attendance than black people, and workshops for savings and checking accounts that have majority black people in attendance. And we have the audacity to wonder what’s contributing to the race wealth gap
The bottom line is that owning stocks and other potentially high-return investments will have an important and dramatic effect on the wealth gap in this country. Until African Americans wake up, see the light, and take an interest in something other than savings accounts and bank CD’s, we will never close the wealth gap. Stop waiting for some politician to pass some laws or some sort of legislation to put some wealth in our pockets. If we take a proactive approach to wealth building and dare to become educated, we just might make a difference in the financial future of our children and their children.
Let’s consider a few things. Black people spend tens of billions on cars, gold jewelry, sneakers, liquor, hairstyles, and more. At the same time, less than 30% owned their homes as opposed to 70% for whites. Now considering the fact that cars depreciate so quickly, I wonder why black people choose to spend a good portion of their money on cars (and other items that hold no long term value) instead of investing or buying a piece of property or a REIT.
While we are out buying the fancy items, white people are out buying stock and investments in the companies that are making the fancy items blacks are buying.
Remember this; you may not care about the black and white wealth disparity in this country, but that attitude is what will ultimately keep black people at the bottom of the economic and wealth totem pole for generations to come. For even if black people were provided opportunities and incentives to grow their wealth, it’s highly unlikely that the majority would take advantage of the situation.
Carlos C. Johnson III, Founder