More black investors turn to markets

By Sandra Block
USA Today

The percentage of African Americans with money invested in stocks and mutual funds jumped to 68 percent this year from 61 percent in 2003, but most black investors believe real estate is the best overall investment, according to a survey released yesterday.

The percentage of white investors with money in the stock market was 80 percent, a level that has remained steady since the Ariel Mutual Funds/Charles Schwab survey was launched in 1998.

But 51 percent of white investors said they also believe real estate is the best overall investment.

This marked the first year the majority of black and white investors said they favored real estate over other investments.

Ariel President Mellody Hobson said last year's stock market turnaround triggered the increase in black investors.

In 2003, the Standard & Poor's 500 index advanced 26.4 percent, ending a three-year bear market.

The preference for real estate isn't surprising, given the rise in home values and increase in home ownership, Hobson says.

But at a time when rising interest rates could dampen home values, the trend is worrisome, says Schwab Vice President Carla Foster.

Real estate "can be an important part of a total investment portfolio, but it shouldn't be the only part," she says. "Real estate is cyclical."

Other findings in the survey:

• 28 percent of blacks cited stocks or mutual funds as the best investment overall, vs. 38 percent of whites.
• Black investors continue to lag white investors in saving for retirement. The median amount in African Americans' retirement plans is $41,300, versus $65,600 for whites. Only 20 percent of blacks who invest in retirement plans had more than $100,000 in savings, compared with 37 percent of whites.

The survey of 500 families earning more than $50,000 a year was conducted in February and March.