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How wealthy black Americans invest their money differently from rich white Americans

By Melvin Backman
Published Last updated This article is more than 2 years old.

It turns out wealth is not a great equalizer—at least not when it comes to investing your riches. A new study by Credit Suisse and

Brandeis University/Credit Suisse

Brandeis University’s Institute on Assets and Social Policy shows rich black Americans put their money to work very differently from rich whites.

Given the overall disparity in wealth levels between the two communities, it’s perhaps unsurprising that the 95th percentile of African Americans has a net worth—$357,000 and up—roughly in line with just the 72nd percentile of white Americans. The richest white 5% are 6.5 times wealthier than the richest 5% of black households.

And the difference isn’t just a matter of scale. Researchers used their own data and bits from the Federal Reserve’s Survey of Consumer Finances to examine the different contributors to each group’s net worth. They found that, on average, the black 5%—their sample was too small to examine the black 1%—allocate their money much more conservatively than white families worth the same amount.

That means putting money in certificates of deposit, life insurance and savings bonds…

…instead of stocks and bonds, two asset classes that have done considerably well in the past few years.

The study also found that the wealthiest black families have more of their money tied up in different kinds of real estate…

…rather than their own businesses, again reflecting a preference for steadier assets. (Greater difficulty accessing start-up money is likely another factor.)


The researchers touch briefly on the the reasons for such conservative investing practices, pointing not just at a lack of diversity in the financial services industry, but also the difficulty blacks families have in maintaining any sort of upward economic mobility.

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