African-American millennials might end up being the generation that represents a turning point in the black community's long-standing avoidance of the stock market.
Recent research done by Ariel Investments shows that 67 percent of blacks under age 40 who earn at least $50,000 annually are invested in stocks either directly or through mutual funds. While their white cohorts' investment rate is higher, at 73 percent, that difference of 7 percentage points is the smallest of all the age brackets in the study.
"Millennials have had the benefit of seeing their parents invest in 401(k)s over the years," said certified financial planner David Jackson, a financial advisor with Waddell & Reed. "So they are much more comfortable with investing."
To put the seven-point difference in the under-40 crowd into context: In the age 40–49 bracket, 72 percent of blacks are invested, compared with 89 percent of whites, or a difference of 17 percentage points. The disparity does not improve for those age 50 and older.
But the study shows that black participation in the stock market has grown overall. In 1998 it stood at 57 percent, compared with 81 percent for whites. The rate has fluctuated since then for blacks, reaching a high of 74 percent in 2002.
The study also concludes that 401(k) plans are a key way for blacks to become invested, because 70 percent of those surveyed said retirement plans are a contributing reason for being an investor, compared with 63 percent of whites.
CFP Zaneilia Harris said the big difference she sees between her black and white clients is in their retirement account balances.
"I might get a [white] couple who, at 40, has $300,000 or $400,000 saved," said Harris, president of Harris and Harris Wealth Management Group. "In the black community, a couple might have $100,000 and think it's a lot of money … but in the context of [retirement funding], it's not a lot."
"I want to see change with that," Harris said. "I want to see that the amounts accumulated are similar."
Lazetta Rainey Braxton, CFP and owner and founder of Financial Fountains, said that historically in the black community, there have been fewer conversations in the home about investing.
"I've found that my white millennials have had more dinner table conversations about [wealth-building]," Braxton said. "There just has been more wealth in their lives, and they have more [comfort] with investing."
She said she spends time helping her black millennials not just with understanding the stock market but with how to position themselves financially for the long haul.
"I'm helping them figure out how to get a leg up and stay there," Braxton said.
The study also shows that blacks' longstanding interest in real estate as an ideal investment might be waning. The number of blacks that say real estate is the "best investment overall" stands at 37 percent, compared with 61 percent in 2004. On the heels of the housing market collapse, in 2010 the figure stood at 30 percent.
"We [historically] relied heavily on investing in real estate," said Harris of Harris and Harris Wealth Management Group. "That was our go-to investment because, I think, we could touch it. It's tangible.The stock market is intangible to a lot of people," she added.
Harris said she tries to make a connection between investing and companies. For example, if you like a particular retail store and it's publicly traded, you can own a piece of it through stock.
Meanwhile, 41 percent of blacks say the stock market is the best investment, up from 28 percent in 2004.
"Blacks are getting in the game and are asking the right questions," said Braxton for Financial Fountains.
— By Sarah O'Brien, special to CNBC.com