Hispanics, which currently represent nearly 20% of the US population, are on track to reach $113 trillion in collective wealth by 2025, according to a new report released by Fintech platform Finhabits.
By comparison, the total household wealth in the US in 2022 was $140 trillion.
Finhabits, which is used by more than 680,000 US Hispanics to invest and access financial education, said Hispanics’ growing adoption of micro-investing options is fueling this collective wealth.
These small, regular and often automated digital deposits into public market securities, such as stocks or bonds, mark a departure from a reliance on home and business ownership as a path to wealth.
Carlos Garcia, CEO and founder of Finhabits, said:
Over the next several years, we’ll see this 20% of the population influence the way 99% of Americans bank. Tech-enabled investing, in particular, will pave the way for a ‘power in numbers’ approach to their wealth accumulation and financial gain.
In order to tap into this significant growth opportunity, Garcia said banks and financial institutions will have to innovate on legacy investment models built for the top 1%.
For this report, Finhabits analyzed the financial investment behaviors of 90,000 investment clients who contribute to Hispanic wealth creation.
The company’s analysts based their financial projections on publicly available census data to identify trends in retirement, savings, home ownership, and Hispanic-owned businesses.
Highlights from the report include the following:
- Micro-investing is driving Hispanics to contribute up to 6.5% of their total income to retirement investments.
- Between 2020 and 2040, the majority of new homeowners will come from the Hispanic community, adding 4.8 million new Hispanic homeowners.
- To maximize their wealth potential, Latinos must invest in public market securities, not just homes and businesses.
“Banks and financial institutions have successfully won over Hispanics in providing basic checking accounts but have not been able to translate this success into winning over Hispanics as they accumulate wealth,” added Garcia.