- 38% of black investors under the age of 40 own crypto, compared to 29% of white investors under the age of 40.
- When the price of bitcoin fell in June, the black community was disproportionately affected.
- Kiersten and Julien Saunders of RICH & REGULAR say you can still bounce back and build wealth.
After a long bull run in 2021, the bitcoin price fell 50% from $42,733 in early 2022 to $24,109 at the time of writing. Major cryptocurrency lenders like Voyager and Celsius has filed for bankruptcyfreezing the assets of millions of investors.
Black investors, in particular, are disproportionately affected by the cryptocurrency crash. According to a study of Ariel Investments, 25% of black Americans own cryptocurrencies compared to just 15% of white Americans. Young people are investing even more, with 39% of black investors under the age of 40 holding crypto compared to 29% of white investors in the same age range.
Kiersten and Julien Saunders, who speak directly to the black community when they share their story of financial independence on their blog, rich and regularhe tells Insider, “There is pent-up frustration in the black community, especially among those who felt that cryptocurrency was an opportunity to catch up and make sure we don’t miss out on another boom.”
The Saunders also point out that the economic disadvantage experienced by many African-Americans makes them vulnerable targets for crypto marketing. “The idea of fast money with high risk,” they say, “is more likely to be embraced by more financially fragile people. When you’re broke or trying to catch up, you start to think that investments are supposed to feel like casinos.” “.
For anyone who needs to recover from their crypto losses, the Saunders have three tips to get back on the path to building wealth.
1. Find stable and diverse sources of income
“Let’s learn from the trap of putting all your eggs in one basket,” says Julien, “and start creating multiple baskets that have different capacities to grow.” When making new investments, the pair suggest looking for less volatile investments, such as index funds, captivityeither real estate — to balance the volatility of your cryptocurrency holdings.
He adds: “Some people might say, ‘Oh, well, I define diversity as 60% in bitcoin, 20% in Ethereum, and 20% in another currency,’ and I’m like, ‘No. I mean, Really diverse and less volatile assets.
2. Plan for volatility by having a healthy emergency fund
“At this point, even in the stock market, you have to plan for volatility in 12- to 18-month sprints,” says Kiersten. “That’s the world we’re in right now.” She specifically suggests running numbers for worst-case scenarios when deciding whether or not to invest in a new asset.
The best safeguard for protecting yourself against risk, says Kiersten, is to make sure you have a fully padded emergency fund. A emergency savings fund has three to six months of living expenses, usually in ahhigh yield savings account that is easily accessible during an emergency.
“Making sure you have a cash flow plan before you make any new investments is important, because nothing is going to go up forever,” he says, reminding people that there are very few guarantees in the market.
Use the Insider calculator to see if you’re on track for a comfortable retirement by answering a few questions about yourself, your savings, and how long you expect to keep working.
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3. Choose new money heroes
Black celebrities like Jay-Z, Snoop Dogg, and Spike Lee have endorsed cryptocurrencies in the past, encouraging Black communities to sign up for an investment vehicle with lower barriers to entry compared to the stock market or real estate.
“Now is the time to ask yourself if you may have outgrown your financial hero,” says Kiersten. The Saunders often teach communities the concept of “hidden wealth,” the idea that wealth creation doesn’t need to be flashy or excessive.
Says Kiersten: “Any time you’ve lost money in the market is an opportunity to reassess. Ask yourself: Do I still believe this person, or this community, should be my financial role model? Just reassess so you don’t make the same mistake again.” .”