Building a Foundation for Generational Wealth Today

The United States is a melting pot, or a tossed salad, of different peoples and intersectional backgrounds. As our motto states — E Pluribus Unum (Out of many, one). Wall Street, however, has yet to reflect this reality. We at Ally Invest want to bring the potential benefits of participating in the markets to a wider audience of consumers. Investing, like inclusion, is an “And” and not an “Or” art. No matter the temperament, point of view or financial situation of the individual, there is a way to learn about and participate in the capital markets for generational wealth building.

Conversations spark curiosity.

As of 2019, less than half of Black and Hispanic Americans owned stocks, compared to approximately 61% of white Americans. But these differences can’t be attributed to any one factor. We know stock market participation is influenced by several elements, from access to education to parental participation and more. And disrupting this current dynamic isn’t possible by focusing on one element. We need a multi-faceted approach that not only makes investing more accessible and approachable but also opens money dialogues at the community, school and peer levels.

Today, about 63% of Black Americans under age 40 own stocks, compared to 46% of those age 60 and above. Data also shows 18% of Black Americans under age 40 discussed the stock market with their families growing up, compared to just 7% above age 40. We see that the trends are moving in the right direction, so it’s vital that we support this progress through representation, telling different “money journey” stories without shame, and making investing education accessible and less intimidating.

Education is essential.

In any area of life, you can’t become an expert without a sense of curiosity and continuous education. You won’t become a master chef without learning how to properly identify the main flavor groups. Likewise, you won’t become a confident investor without an understanding of the market and what makes it tick. But frequently, investment “know-how” is hidden behind a veil of complicated language and a lack of access to mentors who can teach us about the critical habits to succeed at long-term investing. At Ally Invest we shape our investing education to sound and be omni-present and accessible.

Education and access can come in many different formats. When we think about access to 401(k)s, for instance, less than 60% of Black and 50% of Hispanic workers had access to employer-sponsored plans as recently as 2019, compared to about 70% of white workers. Encouraging companies in a range of industries to provide retirement savings opportunities is especially important in promoting the expansion of Black and Hispanic Americans participation in the stock market. Too often, the burden falls on the individual to work against the system to win, as opposed to altering the system to help them win.

Online investment tools, such as robo-advisors, provide an essential bridge to the market for many. Whether you want to begin investing but lack the time to learn about trading or you aren’t comfortable managing a portfolio or paying for a financial advisor, tech-driven robo-advisors makes entering the market more affordable and simpler.

Action begets action.

You’ve probably heard Newton’s First Law of Motion: An object at rest stays at rest, and an object in motion stays in motion. We believe in the power of inertia when it comes to investing. Because once you start investing — once you put that first dollar into the market and once you generate your first dividend — you’re more likely to feel the motivation to keep it going.

The most important part of investing is taking that first step. Open a 401(k) and meet the match if you can. Open an IRA and fund a small amount — maybe in a robo portfolio that is balanced for you. Even if you can’t immediately fund it, establishing the account drives you to the next step of engagement. As soon as you are able to, establish an automatic deposit into your 401(k) or IRA in an amount you can afford.

We at Ally are committed to making investing as accessible as possible for Black and Hispanic communities through programs like Moguls in the Making and our Stock Market Challenge. Partnering with students from primarily HBCUs, we provide introductory education and strategic guidance from our team of industry experts to ensure soon-to-be graduates get their foot in the stock market door — solidifying a foundation to potentially build wealth and financial confidence for themselves and their families.

Committing to closing the wealth gap.

The racial wealth gap won’t close overnight, in a year or even a decade. But every step we take now, no matter how incremental, has the potential to impact future generations for the better. Though we still have a ways to go, our mission is to inspire and encourage people of all backgrounds to take part in one of the most important levers to building generational wealth — a lifetime of investing in the capital markets.

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During her tenure as president of Ally Invest, Lule led Ally Invest Securities, Ally Invest Advisors and API business lines. She also authored several articles about the investing industry and investor behaviors. Lule has a passion for agile product development and an appreciation of design thinking in shaping user-centric experiences. An advocate for financial and retirement solutions that rely on a mix of digital and human guidance, Lule believes in empowering individuals, especially women and minorities, to independently drive their own financial futures.