Et tu, BruteHow are asians and latinx folks doing?
The Racial Gap in Stock Market Participation
- Thread starter OfTheCross
- Start date
Gritsngravy
Superstar
So the stock market participation is supposed to be an answer to the wealth gap, or is it just another way to show how black folks really ain’t got money for real
I feel like this is one of those typical economist studies where they avoid the obvious answer by controlling for the wrong shyt.
Claiming the racial wealth gap is because of lack of stock market participation seems to me to be a lot less likely than the conclusion that lack of stock market participation is due to the racial wealth gap.
"Controlling for income" is meaningless if the white people at $100k income have significantly different wealth than the black people at $100k income. More often than not the high-income Black folk have less inheritance, less property, higher student loan debt, higher credit card debt, higher auxiliary family costs, etc.....which would lead to less participation in the stock market because you ain't nearly as likely to invest money when your income feels less disposable.
If they controlled for not only income but also immediate family wealth/debt in addition to extended family wealth/debt, I would think they would see a large part of the explanation for their results. But economists are constantly controlling for income alone without understanding that income is a poor correlation to SES when comparing across racial lines.
Claiming the racial wealth gap is because of lack of stock market participation seems to me to be a lot less likely than the conclusion that lack of stock market participation is due to the racial wealth gap.
"Controlling for income" is meaningless if the white people at $100k income have significantly different wealth than the black people at $100k income. More often than not the high-income Black folk have less inheritance, less property, higher student loan debt, higher credit card debt, higher auxiliary family costs, etc.....which would lead to less participation in the stock market because you ain't nearly as likely to invest money when your income feels less disposable.
If they controlled for not only income but also immediate family wealth/debt in addition to extended family wealth/debt, I would think they would see a large part of the explanation for their results. But economists are constantly controlling for income alone without understanding that income is a poor correlation to SES when comparing across racial lines.
LV Koopa
Jester from Hell
Having a lot of capital certainly helps, but waiting to get to that level is an excuse and laziness. You can start investing with less than $100, just to learn how the markets and brokerage/trading platforms work. Also, just getting in and learning the finance behind stocks is extremely cheap. There is NO excuse - all the information is on the internet for free.
Investing is much better than using a savings account, and has been for like 15 years straight up for people without a lot of income due to inflation and shytty interest rates banks offered you.
Investing is much better than using a savings account, and has been for like 15 years straight up for people without a lot of income due to inflation and shytty interest rates banks offered you.
I would still advise having a savings account due to volatile times and periods like now.
@Da_Eggman
LV Koopa
Jester from Hell
No, that's a waste of money. Even worse in high inflation times - its losing value even faster than before.
Park around 3 months worth of cash in a checking account. Throw everything else into investments. The only reasons to have a savings account are 1.) A tax account you are auto throwing money into if you receive a W2 and elected not to withhold taxes and 2.) You are saving for something in the short term like a down-payment on a home.
Other than that it's a sucker's game. You're loaning money to the bak at .05% while they loan it out at 10% and you're money is losing value. That's how poor people stay poor.
dora_da_destroyer
Master Baker
this is horrible advice, you should keep a separate savings account - your emergency cash. for some people, savings is 20k+, i'm not about to have that sitting in a checking account thats connected to a debit card that can easily be hacked/stolen.
and poor people stay poor because the US is not set up for most people to have economic mobility, has nothing to do with savings vs investing, poor people aint making enough to do either
dangerranger
All Star
Before the pandemic, I had no idea about stocks. I was ignorant I thought it like gambling. I ended up learning a lot from watching Market Mondays from Earn Your Leisure because there were finally people talking about stocks in a way that was digestible and practical. They made it make sense to me. I'm not going to advocate you buy their programs or anything but they've put out so many episodes since 2020 that can give anyone a good understanding of the basic principles. After learning from them, I went to my company and found out they have my 401k in some BS fund and I changed it and within less than 6 months my 401k shot up $30,000. I cannot emphasize enough how much these corporations do a disservice to not only our people, but people in general because they take advantage of our ignorance.
The issue is with investing as someone here mentioned is you have to have the money to buy frequently and know when to get in and get out and which companies are worthwhile. You're not going to make a ton of money by simply owning 10 shares of anything. You need a lot more than that which requires you to constantly be getting and investing capital. But we also have to be aware that if individuals are struggling to pay their bills or even save (which is reality), how will they have money to invest? It's a bunch of different factors. Sometimes, it's not just a matter of a lack of awareness but a lack of ability too based on lifestyle. All I'm saying is it varies and those who are capable of investing and willing to learn how to, should be doing so.
The issue is with investing as someone here mentioned is you have to have the money to buy frequently and know when to get in and get out and which companies are worthwhile. You're not going to make a ton of money by simply owning 10 shares of anything. You need a lot more than that which requires you to constantly be getting and investing capital. But we also have to be aware that if individuals are struggling to pay their bills or even save (which is reality), how will they have money to invest? It's a bunch of different factors. Sometimes, it's not just a matter of a lack of awareness but a lack of ability too based on lifestyle. All I'm saying is it varies and those who are capable of investing and willing to learn how to, should be doing so.
LV Koopa
Jester from Hell
If you have 20K in a savings account you are a mark. But do you.
I don't fully agree with this. If you don't have the "money to invest" (whatever that means) then you need to BUST YOUR ASS and get it. Very, very few people do not have the ability to earn disposable cash that can be thrown into the stock market. Let's stop with the bullshyt. If you have 2 legs, 2 arms, and a functioning mind and body you can find a way. Lack of ability is an excuse. If you WANT it, you will find a way.
You do not need to hyper focused on managing the investment either - general approach for newbies is to take a long position on a company they think will be around in 10 years, dollar cost average or buy dips, and sit on the sidelines.
As for the 401K part, I'm largely in agreement - let's just say paying a fund manager to do what you can do yourself with 4 hours worth of education is somewhat silly. Especially since they get paid whether the market goes up or down. Only reason I'd advocate to keep a 401K or any other company investment vehicle is if they give a good matching % or bonus. If so, max the shyt out. Otherwise just open up a Roth or identical account if you want to do long term retirement planning. Then again this is somewhat getting off topic but in general that's my approach.
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dora_da_destroyer
Master Baker
or people have high enough incomes which would result in higher savings? or higher expenses in which you'd need more savings?
a mark? how about you just want some easily accessible cash in case of emergency that can carry you for 6 months.
Exactly. Like for a lot of people that is literally 6 to 12 months of expenses. People constantly expose that they aren’t really familiar with money. If you live in a high COL area, your rent or mortgage alone is like 3k a month. At that level you’re reckless if you don’t have 30k in a savings account.
or people have high enough incomes which would result in higher savings? or higher expenses in which you'd need more savings?
That aside, I feel like this is all about the type of jobs people have. Just shows me black folks aren’t at jobs with 401ks.
LV Koopa
Jester from Hell
or people have high enough incomes which would result in higher savings? or higher expenses in which you'd need more savings?
You wouldn't park it in a savings account. I don't think you understand what that account actually does so I'll keep this simple:
You can throw all the money you do not immediately need into something that pays you .05% with a 10% return to the lender, or you can park it in another vehicle that pays 2% with a fee (money market or ETF account). Both are highly liquid. Which do you choose?
Only a fool or the financially illiterate would pick the former. If you want to SAVE money, do it while also getting paid a better premium that beats out inflation (sadly not much anymore). This is partially outside of this discussion, but the reason the saying exists about inflation and low interest rates being a punishment on savers and fools is true is because of that kind of thinking. Your money is losing value and you keep putting it out there to get abused.
Put it in an investment vehicle that's highly liquid with better returns. If you need cash that badly - get your network in order.
dora_da_destroyer
Master Baker
LMAO...you keep emergency cash in a safe, liquid account. Who cares what the lender is getting, when you invest in stocks, the company you invest in is earning way more off your money as well. You don't put money you could need within a year into stocks - losing 10% or more + inflation is a worse off position than inflation itself.
Secondly, please don't think of all people you're schooling me...there's a reason I can have five figure sitting in savings...