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A Black Woman’s Guide To Investing in the Stock Market
According to the data, Black people invest in the stock market at a significantly lower rate than white people. A whopping 59% of Black women are NOT investing in anything, not the stock market, not real estate, not mutual funds, nothing. About 90% of stocks are owned by white people. NINETY PERCENT. That’s basically like every single stock is owned by a white person and most black folks ain’t invested in anything at all.
Black people are seriously lagging behind and I was no exception. Yes, I have a 401K and was contributing to my company’s match. And yes, my company was investing that 401K in the stock market. But any money I had left over was just sitting in my savings account. I had no idea how to invest in the stock market at all. But, like a lot of people during the pandemic, I took some time to learn a little more about money and discovered that if I just keep my money in a savings account I’m basically losing it.
I’m not a financial guru by any means. But what I’d surmised after doing a deep dive on Tim Denning’s Medium articles, was that keeping my money in a savings account alone, even a high yield savings account, would mean that I was only earning a small interest rate on that money and that rate of interest was well below the rate of inflation. If you’re asking yourself, what is inflation? Well, I didn’t understand it either when I started.
Essentially, inflation is the term for how over time the price of goods and services increases. Like how in the 1960s a hamburger cost 25 cents and now it costs $2.50. So in the 1960s, if you had $2.50 you could buy 10 hamburgers but now you can only buy 1 hamburger with $2.50. So, in a sense, the same amount of money gets you less stuff over time. So you have to earn at least at the rate of inflation on your money for it to count as the same amount. Otherwise, the same money today is worth less in the future.
Every year, even though I was saving, I was essentially losing money every year. Losing money. Losing money. L O S I N G M O N E Y. When I finally wrapped my head around this it really upset me. I hate losing money. What was I to do? My answer? Invest in the stock market. But, I knew nothing about it. Not really. So I started doing some research.
