A recent study, Discrimination, Risk and Portfolio Choice, by the University of Miami determined that specific minority groups were less likely to take financial risks than their White heterosexual male counterparts due to exposure to discrimination, particularly if they’ve faced discrimination in the workplace.

Based on a growing body of evidence that supports personal experiences effects on economic decisions, researchers conducted an experiment using prime minority groups for which data was available: African Americans, LGBTQ individuals and women. The findings are the following:

  • LGBTQ individuals who potentially have been discriminated or fear discrimination are about 40 percent less likely to participate in the stock market.
  • African Americans who feel it has been difficult to get a good job due to discrimination are about eight percent less likely to participate in the stock market, and allocate about nine percent less of their wealth to equities.
  • Women who feel it has been difficult to get a decent job due to discrimination are four percent less likely to participate in the stock market, and allocate about four percent less of their wealth to equities.

“People who are discriminated against, in general, do tend to have less opportunities, and that’s affecting their wealth accumulation, their savings which then will affect their portfolio decisions,” says George Korniotis, associate professor of finance at the University of Miami School of Business Administration.

Korniotis also says social risk, or the increased perception of risk, is amplified when individuals live in environments that make them feel vulnerable.  “So what we find is that discrimination just makes people more stressed, more worried, so they start thinking the stock market might be more risky than it is. We do know if you enter the stock market, you definitely can grow your wealth.”

A Pew Research study says Blacks are twice as likely to point out discrimination as a reason for not getting ahead compared to whites. Also 66 percent of blacks feel African Americans are discriminated against when applying for  a loan or mortgage compared to 25 percent of whites.

Recent studies show minorities are making incremental progress in making financial decisions to accumulate wealth. In early 2016, Ariel Investments reported 67 percent of African-Americans with at least $50,000 income were investing in mutual funds or stocks, a 10 percent increase since 1998. While that’s to be applauded, it still lags behind Whites at 86 percent.

Vanguard study found that women are 14 percent more likely to voluntarily take advantage of pre tax retirement savings accounts compared to men. Women are also saving  seven to 16 percent more than men, depending on income. However, women earn 80 cents for every dollar paid to men, which totals roughly a 10,000 pay gap annually.

Al Pickett, Houston-based trader and author of trade coaching program, The Blackprint, teaches clients about risk management, the psychology and methodology of stock markets. He says generational guidance, particularly for African Americans, and lack of early financial education contribute to minorities avoiding financial risk to grow wealth.

“If the parent didn’t know about, if the parents were risk-averse, given the account of the state of African-Americans because of where this country has been, generally, we hold on to what we have,” he says. “It’s about early education, whether it be at home, through public education or private education.”

Financial literacy are few for state education departments, according to the Council for Economic Education. The study reported that only 20 states mandate financial education for high school students. Programs that focus on financial matters and wealth building like Junior Achievement and others may help bridge the gap.

Although discrimination gives the perception of higher social risk, failing to learn about financial matters at all could be the biggest gap, according to Pickett. “It’s riskier not knowing how to do it because they’re only few ways to build wealth in this country that have been proven over time. Ignorance is the biggest risk.”

The implications of not taking financial risks could be greater than we perceive. “You absolutely have to investment income whether that’s dividends from stocks or just the appreciation of an investment over time,” Pickett says. “It’s imperative to increase living standards, have a good retirement and potentially set up the next generation.

Kornitotis says receiving education paired with assessing our experiences is the best practice to take more chances and live a better life. “That was our goal (in this study): to make people aware that their personality and things that happened in the past affects you now. It’s almost like carrying the weight of the past into the future.”

Alisha Tillery is a freelance writer from Memphis, Tenn., who writes on the topics of mental health, self-care and lifestyle. Connect with her on social @Alisha8151.