The racial wealth gap, and how your investments can help narrow it

The racial wealth gap, and how your investments can help narrow it Feb 6, 2024 8:00:00 AM In celebration of Black History Month, we turn our focus toward the topic of Black wealth. Our goal at Betterment is to make people’s lives better through investing. We believe that wealth-building is one of the most powerful tools to live a better life and lay a path for generations to come. So each February, in celebration of Black History Month, we turn our focus toward the topic of Black wealth. The reality of the racial wealth gap and the path ahead We can’t fully appreciate the importance of building wealth for Black people without acknowledging our collective past and examining its lasting impact. Rising out of slavery did not create equality for Black Americans in 1865. Many factors have created and sustained a substantial wealth gap, including housing discrimination, credit inequality, mass incarceration, inaccessible healthcare and education, and lower-paying jobs. The domino effect of these factors has been powerful over the last century and a half. There are still enormous wealth disparities between Black and non-Black households. According to the 2022 Survey of Consumer Finances, the wealth of the typical Black family ($44,900) was roughly 15% of the typical White family. But all is not lost, and progress can be seen. Housing and business equity were key drivers in the 28% growth of Black wealth between 2019 and 2022. Black businesses employed 1.3 million workers and created 48,000 new jobs in 2020 alone. And while stock equity emerged as the largest disparity in wealth growth across racial groups during the same period, Black Americans make up the fastest-growing group of stock investors. So what now? The racial wealth gap is clearly not just a Black problem, nor can it be solved by individual actions alone. Organizations like the National Advisory Council on Eliminating the Black-White Wealth Gap are at the forefront of developing proposals to address the issue systemically. Other organizations are also making meaningful strides toward progress: Black Girls Code fights to establish equal representation in the tech sector. The National Fair Housing Alliance works to eliminate housing discrimination. The National Urban League works to provide economic empowerment, educational opportunities, and the guarantee of civil rights for the underserved in America. How you can join the movement right now Here at Betterment, we’re committed to supporting individuals through our investing products and our voices. In that spirit, we’ve created two ways for customers to make a difference through their investing: Donate eligible shares from your taxable investing accounts to the NAACP, which advocates for economic policies that support Black entrepreneurs and workers. Invest in companies actively working toward minority empowerment through our Social Impact portfolio.