This is a share of a recent report by Brandeis University that shows huge insight on the racial wealth gap. This report, which focuses on the top 5 percent of African-Americans by net worth, asks some telling questions: What are the key drivers of wealth creation among this group? What makes the investment choices of this group distinctive? What brings about these distinctions?
The results are striking: For example, the report observes that wealthy blacks own few high-reward portfolios containing stocks, bonds, and mutual funds and more low-reward portfolios containing CDs, saving bonds, and cash-value life insurance. And meanwhile, whites of similar high wealth steer clear of such low-reward investments.
As a result of these potentially unintended choices, wealthy blacks end up with annualized returns of 1 to 2 percent whereas wealthy whites end up with annualized returns of 7 to 10 percent.
Before we get to that point though, we have to get over the extreme gap in current wealth. For instance, only 5 percent of black households have $360,000 or more in net wealth while 28 percent of white households have $360,000 or more in net wealth.
For more details of the full report click here: https://iasp.brandeis.edu/pdfs/2014/Top5.pdf