Early retirees Kiersten (left) and Julien Saunders.
Phyllis Iller
38% of Black investors under 40 own cryptocurrency, compared to 29% of white investors under 40.
When the price of bitcoin dropped 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 price of bitcoin dropped 50% from $42,733 at the top of 2022 to $24,109 at the time of this writing. Major crypto lenders like Voyager and Celsius have filed for bankruptcy, freezing the assets of millions of investors.
Black investors in particular are disproportionately affected by the crypto crash. According to a study by Ariel Investments, 25% of Black Americans own cryptocurrency compared to only 15% of white Americans. Young people are investing even more heavily, with 39% of Black investors under 40 owning cryptocurrency compared to 29% of white investors in the same age range.
Kiersten and Julien Saunders, who address the Black community directly when sharing their financial independence story on their blog, rich & REGULAR, tell Insider, “There’s pent-up frustration in the Black community, especially among those who felt like crypto was an opportunity to catch up and ensure that we didn’t lose out on another boom.”
The Saunderses also point out that the economic disadvantage experienced by many Black Americans makes them vulnerable targets for crypto marketing. “The idea of fast money with high risk,” they say, “it’s more likely to be embraced by more economically 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 bounce back from their crypto losses, the Saunderses have three pieces of advice to get back on the wealth-building track.
1. Find stable and diverse sources of income
“Let’s learn from the pitfall of putting all eggs in one basket,” says Julien, “and let’s start creating multiple baskets that have different ability to grow.” When making new investments, the couple suggests finding less volatile investments — like index funds, bonds, or real estate — to balance out the volatility of your crypto holdings.
He adds, “Some people may say, ‘Oh well, I define diversity as 60% of it in bitcoin, 20% in Ethereum, and 20% in another coin,’ and I’m like, ‘No. I mean, truly diverse, less volatile assets.”
2. Plan for volatility by having a healthy emergency fund
“At this point, even in the stock market, you need to plan for volatility in 12- to 18-month sprints,” says Kiersten. “That’s just the world that we’re in right now.” She specifically suggests running numbers for the worst-case scenarios when deciding whether or not to invest in a new asset.
The best safeguard to hedge against risk, says Kiersten, is to ensure you have a fully-padded emergency fund. An emergency savings fund has three to six months’ worth of living expenses, typically held in a high-yield savings account that’s easy to access during an emergency.
“Ensuring that you have a plan for cash flow before making new investments is important, because nothing is going to keep going up forever,” she says, reminding people that there are very few guarantees in the market.
3. Pick new money heroes
Black celebrities like Jay-Z, Snoop Dogg, and Spike Lee have endorsed cryptocurrency in the past, encouraging Black communities to sign on to an investment vehicle with fewer barriers to entry compared to the stock market or real estate.
“Now’s the time to ask yourself if you may have outgrown your financial hero,” says Kiersten. The Saunderses often teach communities the concept of “stealth wealth,” the idea that wealth-building doesn’t need to be flashy or excessive.
Says Kiersten, “Any time you’ve lost money in the market is an opportunity to reevaluate. Ask yourself, Do I still believe this person, or this community, should be my financial role model? Just reevaluate so that you don’t make the same mistake again.”