BMWorldwide-Chicago–The confluence of low stock market participation, appetite for risky investment options, and alarming lack of knowledge about fundamental investing principles is a red flag about the critical need for greater investor education,” said Mellody Hobson, Co-CEO and President of Ariel Investments.

Announcing the 24th Ariel-Schwab Black Investor Survey, she said “Many new and younger investors have never experienced market volatility like we’ve seen in the last couple years, and we have a responsibility to educate these new investors about the value of long-term investing to build wealth and achieve financial security.” 

When asked about anticipated investment returns, more than one-in-four Black investors (27%) expect outsized annualized returns of 20% or higher, and 19% thought they could “get rich quick” through investing. This is compared to only 12% of white investors who anticipate returns of 20% or higher, and 7% who cite immediate profits as a reason to invest. Black investors under 40 have even higher expectations, with 34% expecting returns of more than 20%, compared to 15% among white investors of the same age. 

Trust and Fear are Barriers to Investing, Respect is On the Move 

Black Americans are less trusting of the stock market (30% vs. 23%) and financial institutions (28% vs. 18%) compared to white Americans. This has led to many Black investors pulling out of the market. 

Since 2020, Black Americans who either stopped investing or have never invested were more likely to cite lack of trust in the stock market (36% vs. 29%) and financial institutions (25% vs. 19%), as well as having had a bad investing experience (15% vs. 9%), as reasons. 

Black investors are also more fearful of losing money than white investors—56% cite it as a concern prior to investing compared to 46% of white investors. In parallel, Black investor perception of the stock market as offering a fair opportunity for all to profit improved in 2022 (48% vs. 40% in 2020), signaling optimism for the future. 

While trust remains low, feelings of respect have also improved. As in 2020, Black Americans were less likely than white Americans to feel respected by financial institutions, however, that gap has decreased substantially. Black Americans feel more respected in 2022 (44% vs. 35%), while white Americans feel less respected (51% vs. 62%).