Wealth Patterns Among the top 5% of African Americans
This study showed that the top 5% of African Americans invest a greater proportion of their wealth in lower-volatility assets relative to a white comparison group, including insurance, savings bonds, and CDs. The study also revealed proportionally higher investments in real estate and proportionally lower investments in business assets.
In November 2014, Credit Suisse released “Wealth Patterns Among the Top 5% of African Americans”. Highlights of the report include:
The top 5% of African Americans take a relatively conservative approach to decision-making on matters of wealth creation and wealth management. For example:the investment portfolios of the top 5% of African Americans are three times more heavily weighted towards CDs, savings bonds and insurance than the investment portfolios of the study's white comparison group, and are nearly one-half less weighted towards stocks, bonds, and mutual funds. The top 5% of African Americans invest 9% of their non-financial assets in business assets, defined as the total value of business(es) in which a household has either an active or non-active interest. The study's white comparison group invests 37% of their non-financial assets in business assets. The top 5% of African-Americans invest 41% of non-financial assets in real estate outside their primary home, relative to 22% for the study's white comparison group.
"Wealth mobility"—the degree to which a population maintains wealth over time or moves into wealth over time—is relatively low among African Americans and may be a driver of more conservative financial decision-making. IASP's research shows that around 57% of high-income African American families in 1984 were still in the top segment of income in 2009, but 8% had fallen into the low-income segment. For high-income white American families, 73% remained in the high-income segment and only 1% fell into the low income segment. This analysis is a new analysis of the 1984-2009 data.
Education is a key driver of wealth among the top 5% of African Americans. Almost 69% of African Americans at the 95th percentile of net worth have a college degree, compared with 64% for the study's white comparison group.
For more information, please contact Tatjana Meschede at (781) 736-8678.