Black Investors' Financial Goals and Resources in 2021

Story Highlights

Black investors have below-average tolerance for investment risk
Have above-average expectation for retirement income with own business
Have typical money goals, like saving for retirement, paying off debt

WASHINGTON, D.C. -- According to the latest Wells Fargo/麻豆传媒AV investor survey, Black investors have similar financial goals as U.S. investors generally and are just as optimistic about saving for retirement, while differing in the following ways:

Having lower risk tolerance when it comes to investing
Putting greater emphasis on entrepreneurship and pensions for retirement income while putting less emphasis on inherited money
Giving more frequent financial support to friends and family

Black Investors Less Comfortable With Risk in Investing

Thirty-eight percent of Black investors, contrasted with 47% of investors overall, say they are willing to take on "a lot" or "fair amount" of risk in the hopes of generating higher investment returns. A 54% majority of Black investors, versus 47% of all investors, are most comfortable taking on "only a little" risk, and 7% of both groups opt for no risk at all.

U.S. Investors' Tolerance for Risk

As you may know, investments with higher risk offer more growth potential than investments with less risk. Are you someone who is willing to take on a lot of risk, a fair amount of risk, only a little risk, or no risk at all in the hopes of generating higher returns on your investments?

	Black U.S. investors	Total U.S. investors
	%	%
A lot of risk	3	6
Fair amount	35	41
Only a little	54	47
No risk	7	7
A lot/Fair amount	38	47
Wells Fargo/麻豆传媒AV Investor and Retirement Optimism Index, Feb. 8-16, 2021
麻豆传媒AV Panel

The latest results are based on the Wells Fargo/麻豆传媒AV Investor and Retirement Optimism Index survey conducted Feb. 8-16. The poll was conducted by web using the probability-based 麻豆传媒AV Panel and includes an oversample of Black investors weighted to their correct proportion of the population.

For this poll, investors are defined as U.S. adults with $10,000 or more invested in stocks, bonds or mutual funds. According to 麻豆传媒AV analysis, approximately two in 10 Black adults meet this criterion, versus approximately 45% of national adults.

Different Expectations for Affording Retirement

Overall, Black investors are just as confident as investors overall about having enough income in retirement, with 73% and 69%, respectively, saying they are highly or somewhat confident. But how they plan to go about funding it is slightly different.

Among non-retirees, Black investors are more likely than investors generally to say entrepreneurship, such as starting their own business, will be a major or minor income source for them in retirement, 33% vs. 23%, respectively. They are also more likely to say a work-sponsored pension will be part of their retirement security. At the same time, Black investors are less likely to say an inheritance will be an income source.

None of these three sources is a leading expected income source for non-retired investors, but on a relative basis, Black investors put more weight on entrepreneurship (33%) than on an inheritance (19%), while the reverse is true for investors at large (28% inheritance vs. 23% entrepreneurship).

Meanwhile, there is no statistical difference between non-retired Black investors and non-retired investors as a whole in their expectations for relying on a regular savings account, part-time work, rental income, Social Security, family support, a 401(k) or other retirement account, or home equity.

Non-Retired Investors' Expected Sources of Retirement Income

When you retire, how much do you expect to rely on each of the following sources of money -- will it be a major source of income, a minor source of income, or not a source at all? % Major or minor source

	Black U.S. investors	Total U.S. investors	Difference
	%	%	pct. pts.
401(k), 403(b), IRA or other retirement account	94	94	0
Social Security	89	88	+1
Regular savings account or CD	73	67	+6
Part-time work	63	60	+3
Equity built up in your home	56	61	-5
Work-sponsored pension plan	53	44	+9
Entrepreneurship such as starting own business	33	23	+10
Rental income	24	21	+3
An inheritance	19	28	-9
Financial support from family	8	7	+1
Wells Fargo/麻豆传媒AV Investor and Retirement Optimism Index, Feb. 8-16, 2021
麻豆传媒AV Panel

Helping Family Financially More Routine Among Black Investors

Providing "significant or routine financial help" to at least one relation or friend in the past few years is more common among Black investors (69%) than U.S. investors as a whole (57%).

Much of the difference is explained by Black investors' financial assistance to extended family members, as nearly twice as many Black investors as investors as a whole say they have provided this help. But they are also more likely to have given money to their adult children, parents and friends.

Percentage of U.S. Investors Providing Financial Help to Each Relation

Now thinking about money, in the past few years have you provided significant or routine financial help to each of the following? (% yes, shown)

	Black U.S. investors	Total U.S. investors	Difference
	%	%
One or more adult children, aged 18+	49	41	+8
One or more parents or parents-in-law	20	14	+6
Other extended family members	29	16	+13
Friends	17	11	+6
Total one or more relation/friend	69	57	+12
Wells Fargo/麻豆传媒AV Investor and Retirement Optimism Index, Feb. 8-16, 2021
麻豆传媒AV Panel

Although serving as a financial safety net is more common among Black investors than the general investing public, the average amount they report giving to their personal relations in recent years is lower: approximately $17,000 among Black investors compared with roughly $25,000 among all investors.

Investors' Financial Goals Are Broadly Shared

The survey asked investors how much progress they have made on six financial goals some people set for themselves, or to say if each is not a goal, At least four in five investors, including Black investors, say that saving for retirement, paying off debts and buying a home are goals they have. Similar proportions of both groups also say they have either completed that goal or made a lot of progress toward it.

Just over half of investors say saving money to leave an inheritance to their children is a goal, while about a third have completed it. Closer to four in 10 indicate that saving for a child's college education is one of their goals, while about a quarter say owning their own business is a goal. Black investors' orientation to all of these financial goals closely mirrors that of the broader universe of U.S. investors.

U.S. Investors' Financial Goals and Progress Toward Completing

	Total have this goal	Completed/Lot of progress^
	%	%
Saving enough to live comfortably in retirement
Black U.S. investors	98	36
Total U.S. investors	98	42
Paying off debts
Black U.S. investors	88	63
Total U.S. investors	88	68
Buying own home
Black U.S. investors	83	80
Total U.S. investors	86	84
Saving to leave money (an inheritance) for children
Black U.S. investors	57	33
Total U.S. investors	55	36
Saving for a child's college education
Black U.S. investors	37	46
Total U.S. investors	42	40
Having own business
Black U.S. investors	28	46
Total U.S. investors	25	52
Wells Fargo/麻豆传媒AV Investor and Retirement Optimism Index, Feb. 8-16, 2021 ^Amount of progress based on investors who have each goal
麻豆传媒AV Panel

This alignment is further seen in how investors rank their financial goals. Saving for retirement dominates among both groups, followed by paying off debts. Only when factoring in investors' top three goals out of the six rated does some differentiation appear. Black investors (17%) are more focused than investors generally (10%) on owning their own business, while they are less focused on saving for a child's college education.

Rank Order of U.S. Investors' Financial Goals

Which of these is your most important savings goal right now?

	Black U.S. investors	Total U.S. investors
	%	%
Top mention
Saving enough to live comfortably in retirement	55	60
Paying off debts	24	23
Saving to leave money (an inheritance) for your child(ren)	10	6
Buying your own home	6	6
Saving for a child's college education	3	3
Owning your own business	1	1
Top three mentions
Saving enough to live comfortably in retirement	93	95
Paying off debts	70	67
Saving to leave money (an inheritance) for your child(ren)	54	53
Saving for a child's college education	22	32
Buying your own home	31	29
Owning your own business	17	10
Wells Fargo/麻豆传媒AV Investor and Retirement Optimism Index, Feb. 8-16, 2021
麻豆传媒AV Panel

Financial Resources and Safety Nets

Black investors are also similar to investors as a whole in the types of financial safety nets they have created for themselves. Approximately nine in 10 Black investors report having a 401(k) or other retirement savings plan (87%), three-quarters report having a three-month emergency savings fund (76%), more than four in 10 say they have a written financial plan (44%), and a similar percentage have a will (43%).

At the same time, Black investors are slightly less likely to report having access to bank loans (78% of Black investors versus 85% of all investors) as well as to have at least $1,000 in credit available on credit cards (89% vs. 96%).

Bottom Line

U.S. Black investors have the same broad goals for their financial lives as U.S. investors generally, with saving for retirement being chief among them. Black investors are also on par with the broader investor community when it comes to confidence in reaching their retirement goals. However, they have slightly different expectations for how their retirement will be funded, including greater intent to use their entrepreneurial skills to produce income. In terms of passive income, Black investors' avoidance of risk in investments could be limiting. While risk avoidance can be a virtue in some settings, it can be a risk to investing itself, given the value risk can have in achieving higher investment returns over the long term.

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