The Racial Investing Gap

At the Washington Post, Michelle Singletary has an important column on the racial investing gap. For obvious historical reasons, many people of color have little trust in financial institutions. She describes how her own grandmother was unwilling to invest her savings.

Big Mama eventually put aside about $20,000 for her retirement. But she kept it all in a simple savings account. The bank teller couldn’t even persuade her to put the money in a short-term certificate of deposit.

“No, ma’am,” Big Mama told her. “Leave my money right in the savings account.”

Federal Reserve data from the 2019 Survey of Consumer Finances found that Black families are far less likely than White families to have retirement investment accounts.

“Among middle-aged families — who have the highest rates of account ownership — 65 percent of White families have at least one retirement account, compared to 44 percent of Black families,” the Fed said.

Those who like to pigeonhole Blacks as financial illiterates argue that the disparity results from the failure of Blacks to comprehend the importance of investing. This viewpoint ignores the history of slavery and its enduring impact on the descendants of enslaved people.

Posted by on October 12th, 2020 at 10:31 am


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