By Tequilla Swan
A majority of Black, Hispanic and Latino investors surveyed in Phoenix (70%) say that building
generational wealth was a motivation for why they started investing, according to J.P. Morgan Wealth Management’s Diverse Investor Study.
But what exactly is “generational wealth?” We call generational wealth the assets that you pass down to the next generation, whether that’s your children, grandchildren, or even friends or other relatives. You can think about it like a baseball game. Do you want the next generation to start out on first base, second or third? If you pass down generational wealth, it can help give them a head start.
The importance of generational wealth in the Black community
Structural barriers have created racial inequalities in the United States that have persisted for
generations. These barriers have historically put a strain on economic mobility for many Black families to build multigenerational wealth. According to data from the Federal Reserve in 2022, the typical Black family has $15 for every $100 of wealth held by white families.
It’s no surprise that our study found that generational wealth is a key priority in the Black community. And it’s not just a priority in Phoenix. The majority of Black respondents nationwide listed it as a top motivator for why they started investing in the first place.
There is good news, too. Our research found that 72% of Black, Hispanic and Latino investors surveyed in Phoenix say they feel confident about their financial knowledge regarding investments and retirement. Financial literacy is an important first step in the journey towards building long-term wealth, so this is encouraging to see.
Why investing is a key component to helping build wealth
Investing can be a powerful tool to help build wealth in the long term. Starting to invest early on can allow you to take advantage of the power of compounding. Each year, any investment gains you might accumulate would build off of gains from prior years. Investments don’t go up all of the time, but compounding can help your investments grow in the long term. This works best if you stay invested. The earlier you invest, the more time your money has to potentially grow.
The amount of time that you are invested is one of the most important factors in growing your wealth. This is why it’s so important to take a long-term approach when it comes to investing. Remember, it’s about time in the market, not timing the market.
Tips for Black investors in their wealth-building journey
For Black investors who are looking to get started in their journey towards building generational wealth, here are a few tips to keep in mind:
Have a plan. – Money is personal, and everyone’s financial situation is unique. It’s important to have a plan for working towards your goals that is built around your personal circumstances and priorities. Take time to think about your goals for the short and long term, like building generational wealth, and map out the timeline for those goals. You should also gauge how comfortable you are with risk. All of these factors will vary by the individual, so it’s important to figure out what it looks like for you.
Remember you can start small. – There is a common misconception that you need a lot of money to start investing. This isn’t true. You can start small, with an amount that is comfortable for you, and work towards increasing how much you invest over time. What’s important is getting started and staying consistent.
Don’t be afraid to ask for help. – Everyone has their personal preference for how they manage their money. If you don’t feel comfortable doing it on your own, working with an advisor may be helpful. An advisor can provide professional guidance along your financial journey and help keep you on track with your goals. You don’t have to do it alone.
Tequilla Swan is a Private Client Advisor at J.P. Morgan Wealth Management based in Phoenix, Arizona.She was named a Forbes 2024 Top Women Wealth Advisor Best-In-State earlier this month.
Forbes/SHOOK Top Women Wealth Advisors Best-In-State (02/08/24). Data as of 09/30/23. Ratings may not guarantee future success or results. Fee paid to rating provider for advertisement materials after rating announced. Methodology here: jpmorgan.com/award-disclosures
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Certain advisory products may be offered through J.P. Morgan Private Wealth Advisors LLC (JPMPWA), a registered investment adviser. Trust and Fiduciary services including custody are offered through JPMorgan Chase Bank, N.A (JPMCB) and affiliated trust companies. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMS, CIA, JPMPWA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co.