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Let me be blunt. The greatest problem facing black America, bar none, is the wealth divide. Over the past three decades, it has been our view that building true multigenerational wealth — which must be defined by net worth, or assets minus liabilities — represents the completion of the third phase in African Americans’ fight for independence and equality in this country. The first phase was our struggle to break free from the physical bondage of slavery. The second phase was gaining access to social, educational, and business institutions largely because of the efforts of Civil Rights leaders and influencers of government policy. The next battle is to vigorously apply individual wealth-building practices and develop a solid African American investor class. The objective: financial and economic empowerment.
Unlike the divides, digital or otherwise, the wealth gap is measurable. For example, at a time when the American economy appears to be propelled by jet fuel, African Americans are still lagging behind the rest of the nation. A recent study by the University of Michigan revealed that the net worth of the median black household decreased from $8,400 to $7,500 between 1994 and 1999, while at the same time the net worth of the median American household increased 9% to $50,500. Going forward, African Americans must realize that the decision to invest or save discretionary income vs. consume is “a zero-sum game,” asserts John E. Williams, the chair of the department of economics and business at Morehouse College in Atlanta.
In recent years, African Americans have been largely locked out of the financial markets be-cause of a mind-set. In the blackenterprise .com survey on financial health, the respondents that shunned the financial markets maintained that the reasons they didn’t invest included not having enough knowledge, believing they didn’t have enough money, or thinking they were going to lose their hard-earned dollars. In fact, many of the misers parked their bucks in savings accounts instead of the stock market, missing out on double-digit compound annual returns.
There’s good news, though. Some African Americans are finding that prosperity will not come from a checkbook or a passbook. They have decided to embrace the financial markets as a means of wealth accumulation. The recent Ariel-Schwab survey on African American investment patterns shows that the number of black investors has been on the rise: fully 64% of the African Americans surveyed actively invest in the stock market, up from 57% two years ago. There has been a dramatic forward movement as organizations from the Coalition of Black Investors to the National Urban League have been pushing blacks to embrace sound money management practices. Not to toot our own horn, but over the past 30 years black enterprise has been the leader of this movement. And, to kick off the millennium, we developed the Black Wealth Initiative, our comprehensive financial education and empowerment program. The following five strategies outline how to achieve — and yes, even exceed — your financial goals for the next 30 years.
Join the B.E. Wealth Initiative. With aging baby