Kayla Green has lost more than money this past year. Early in the pandemic, the 30-year-old elementary school teacher lost her partner, in part due to increased financial stress she and her family were facing.
“A few things happened. I was depressed, so that happened. My partner died, and then I was behind on bills, so I was stressing about that,” Green said. “And the bills were piling up because, like I said, we were home all the time and I was just like, gosh, this is so expensive.”
But Green adds that one positive of the pandemic is that she’s had a lot more time to think about her future.
“I think the pandemic has allowed me to slow down and really look at the wealth that I do have and if I have any to add on,” she said. “What I’ve been trying to do is start investing, because I do think as a millennial, I do have more opportunity to invest because of the different types of investments that exist now.”
While a recent poll by Valley Vision and CapRadio found that Black millennials were suffering great financial losses during the pandemic, many Black millennials have also turned to investing and cryptocurrencies as a way to build some of that lost wealth back.
Green has said that her parents didn’t have a lot of generational wealth to pass down to her — she had to work through college and turned down study abroad opportunities for financial reasons. But she wants things to be different for her children. Though she said her parents weren’t active investors, Green has started to teach herself in her free time. Currently, she’s investing in a mix of cryptocurrency and regular stocks.
A study from 2015 by financial investment company Ariel Investments showed that younger generations of African Americans were already closing the gap in stock investments with their white counterparts.
According to their study, 67% of African Americans under the age of 40 who earned at least $50,000 a year were invested directly in stocks or in mutual funds. Their white peers were invested at 73%. However, for those above the age of 65, only 56% of African Americans were invested in the stock market, as compared to 88% of their white peers.
Jay King of the California Black Chamber of Commerce says traditionally, African American participation in the stock market has been low, in part because of access.
“We weren’t even allowed into the stock market, you don’t even have stockbrokers who were Black until the late '40s early '50s,” King said.
However, he said that for millennials today, the internet and tools like Instagram and Robinhood have made investing in the stock market much more accessible for a younger generation.
“I think millennials have had the benefit of seeing their parents and 401ks. They’ve had a chance to be involved in the cryptocurrency craze, so they’re a little less fearful," he said.
While King and other experts believe some millennials may be able to leverage this into helping to close the generational wealth gap, he advises caution and taking a financial literacy class first. In fact, recent reports have found that though Robinhood is easy for new investors to use, the way it “gamifies” investing can encourage younger users to be more reckless.
AJ Scott is a 29-year-old Sacramento resident who encourages other Black millennials to grow their investment portfolios. He said his father was very involved in investing as he was growing up, so he’s always had an interest in finances. In addition to his day job as a financial contractor working with small businesses, he currently runs a financial advice group called IE Consulting and gives out tips on his Instagram.
He says he definitely saw a bump in investing interest with the rise of certain apps that make investing and tracking gains easier. He's also seen an added rush during the pandemic.
“I think it increased a thousand fold because people didn’t have anything else to do, some of the money they would usually spend on frivolous things, those things weren’t available so they had extra money to put into investing,” Scott said. “And once they were able to see that it works, I think that’s what really sparked the whole idea moving forward.”
But he adds that though he can see how many younger people might be tempted to use cryptocurrency as a way to close the wealth gap, cryptocurrency investing is risky in the end.
“I tell people, you don’t want to put all your eggs in one basket when it comes to cryptocurrency because it’s decentralized, so you kind of want to use it as a short term thing to invest in things that are long term like health care and technology,” he said.
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