Affluent Women of Color Took a More Aggressive Approach to Investing in 2020

Affluent Women of Color Took a More Aggressive Approach to Investing in 2020

1 in 5 wealthy Black and Latina women invested to capitalize on volatility
A woman investing money

While the pandemic created financial challenges for many Americans in 2020, a subset of wealthy women were particularly proactive about their investment goals.

Black and Latina women with at least $150,000 available to invest were more likely than their white counterparts to invest proactively this year and were more confident about achieving their financial goals in the near future, according to new research by financial services company J.P. Morgan Wealth Management.

Though 79% of affluent Black and Latina investors admitted the pandemic had impacted their investments, mostly negatively, the majority are optimistic about the financial year ahead.

Making investment gains despite the pandemic

Not everyone viewed the pandemic as a time for cutting back. Nearly 1 in 5 affluent Black and Latina women — 19% — started investing in 2020 in order to take advantage of the ups and downs in the stock market this year. In comparison, only 5% of affluent white women did the same.

Interestingly white women were slightly more likely than women of color to spend more time reviewing their spending habits during the pandemic, with 43% doing so compared with 40% of women of color. An earlier survey found that women in general were more engaged in their finances during the pandemic.

Women of color weren't just more optimistic about investing; they were more optimistic about their finances overall. In fact, 75% of affluent Black and Latina women said they were confident about their financial goals in the next year compared with 50% of affluent white women.

Some women of color see investing as uphill battle

Some Black and Latina women may be more willing to invest in a challenging economic environment because they feel like they have to. More than half of affluent Black and Latina women — 55% — said they believe investing in general is more challenging for those of their race. In fact, 21% said they either believed investing services offered do not fit their needs or they have had a bad investment experience compared with only 7% of affluent white women.

When asked about barriers to investing, women of color also have been more likely to be hindered by debt. Nearly a third of affluent Black and Latina women — 30% — said having too much debt was a hindrance to starting to invest compared with 22% of affluent white women who felt that way.

On top of that, many women of color may be used to finding their own way with little support when it comes to building wealth:

  • 78% said they got started in investing by teaching themselves through apps, television shows and other educational resources.
  • 47% of white women used self-directed resources to learn how to invest.

Many women of color are also using their money to support friends and family. Nearly 30% of affluent Black and Latina women said they provided financial support to friends and family in 2020 while only 11% of affluent white women reported doing so.

Women in general could suffer negative consequences from taking a passive approach to investing since it is a major way to save for retirement. In fact, many women have become less confident they will retire comfortably since the pandemic.

Methodology: J.P. Morgan surveyed 1,375 women investors who had a minimum of $150,000 in investable assets. The survey took place in October 2020.