If you can't see it, will you believe in it?
The "it" takes different forms, depending on the context. If the focus is black wealth, the "it" represents the stock market. And in this context, investing time, energy and even money into something unseen can translate into a very risky proposition.
If wealth is a household objective in black communities, the stock market should absolutely be considered.
Low African-American participation in the stock market contributes to the widening wealth gap between black and white households, according to a 2014 study by Credit Suisse and Brandeis University's Institute on Assets and Social Policy.
There are signs, however, that change is coming. To that point, according to a 2017 market research report, about 67 percent of African-Americans with incomes of at least $50,000 have money invested in stocks or stock mutual funds. That compares with 60 percent in 2010 and 57 percent in 1998.
Proven, tangible options — such as real estate, certificate of deposits and insurance policy contracts — have made the case for expanding one's portfolio to include the stock market a tough sell for African-Americans.
Let's be honest, when the stock market's highs and lows show up in real numbers on investment statements, handling the ping-pong effect between euphoria and misery challenges even the best of us. The stock market as a long-term play requires trust, engagement and belief that "it" was created with us in mind.
The stock market features a concept that resonates with many African Americans: business ownership. In fact, entrepreneurship holds great importance for historically disenfranchised communities seeking greater access to goods, services and sustainable income. Business investment as a stockholder expands opportunities to join other stakeholders in the quest for profitability and returns, as well as to share the risks.
Also, there is no escape from investing in the market if you plan to have a paycheck in retirement. With the decline of employer-funded pensions, workers rely more than ever on individual contributions in market-based investments such as individual retirement accounts, employer-sponsored retirement accounts — e.g., 401(k), 403(b) and 457(b) plans and SEP IRAs — and personal investment accounts, including brokerage and health savings accounts.
As the adage goes, "If you can't beat them, join them."
Here are some tangible ways that can help unbelief in the black community regarding stock market investing turn into informed belief:
It's important for African-Americans to recognize that they don't have to take the plunge into the stock market alone. Consider taking classes in investments, hiring a certified financial planner and joining an investment club. It's important to design an investment strategy in the stock market that has your specific investment goals in mind.
— By Lazetta Rainey Braxton, founder and CEO of Financial Fountains
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.