Junior Achievement

Students competing in the stock market cahllenge

In today’s world, there is a significant racial disparity when it comes to investing for the future. Some of this has to do with trust and fear but also a lack of financial literacy being taught at home or in school. According to CNBC, only about half of Hispanic and Black Americans own some form of investment compared to 78% of white Americans. Less than a third of Black Americans have a retirement account, whereas 63% of white males have invested in their retirement.

Knowing how to invest strategically is a main aspect of financial literacy education and a critical component of building generational wealth. With the rise of technology, investing has never been easier or more accessible. Over the last year, there has been a huge increase in the number of people starting to invest in the stock market.
The fear of taking on risk and lack of diversity among financial experts are major contributing factors that many Black Americans cite for not making investments. Another reason is the misconception that there is a minimum amount of capital required to begin investing.

We need to be teaching young people about different investments, the levels of risk each investment carries, and how to make smart assessments on how much risk to take on at a given time. Investing should not be viewed as something to be fearful of, but rather a vehicle for growing wealth and providing financial stability. Investing is critical to beating inflation and generating a passive source of income.

Young people should be aware that they can start investing regardless of how much money they are starting with. Fractional-shares and zero fee brokerages enable anyone to put their money into the stock market just by opening an account. Educating young people early on about investing smartly is essential in the efforts to reducing racial economic inequalities.

Every year Junior Achievement of San Diego County (JA) hosts their Stock Market Challenge to introduce high school students to the fundamentals of stock market investments by volunteers from their own communities. Students can practice making long-term investments and developing investment strategies based on real-world events in a risk-free environment. It is a fun, engaging way to get young people to think about their futures and how they are going to manage their personal finances. A total of 513 students received the curriculum while more than 250 students participated at this year’s event in March. Teams hailed from all over the county including Hoover High, Lincoln High, Mt. Miguel, El Camino High, El Capitan High, and even schools from Tijuana, Mexico.

To prepare for the event, students spent a period of five weeks learning about investing and how the stock market operates through JA Take Stock in Your Future curriculum taught by volunteers in their classroom. Students learned about the types of investments, the importance of diversification, and the power of compound interest.

Providing financial literacy education that encompasses how to invest is necessary in preparing young people for a successful future and narrowing the racial investing gap. Through collaborative efforts among schools, teachers, and community organizations, we can help young people find their path towards financial freedom.

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Esteban Villanueva