How to build wealth: 4 lessons from Hispanic-Latino investors

Wealth – or riqueza – is as often a measure of financial success as it is a source of pride, an opportunity to live a full life, and the chance to secure a lasting legacy.

To learn more about how Hispanic-Latino investors perceive wealth and the strategies they use to achieve riqueza, Morgan Stanley recently published its 'State of Hispanic-Latino Wealth'¹ report, based on a survey of emerging affluent and high net worth Hispanic-Latino investors.

Through our survey of these affluent investors, we learned that their journey is like that of many others, regardless of heritage: one that is not just focused on accumulating money, but creating a future where their families can thrive and achieve goals once thought unattainable just a few generations prior.

Here are the barriers these investors faced, along with the strategies used to overcome them.

Hispanic-Latinos view wealth as a holistic concept that includes money, good health, living a vibrant life, nurturing strong family relationships, and contributing to their community. Financially, Hispanic-Latinos are some of the strongest wealth builders in the US, with the Survey of Consumer Finances reporting that Hispanic-Latinos grew their wealth at a higher rate than any other cohort from 2020-2022 and were the only group to increase their wealth in 2022, even as Americans from other backgrounds experienced negative wealth growth in the wake of the pandemic.

While Hispanic-Latinos often define wealth as a means of creating independence and stability, many struggle with significant barriers along their path.

1. Limited financial education is cited as the top barrier (77%); without an adequate understanding of key financial principles like compound interest, it can be a struggle to save and invest in a way that accelerates wealth building.
2. Another key barrier cited by survey respondents is growing up in a household with limited funds (68%). When a family is doing all it can to put food on the table and stretch its budget further, it can be difficult to put away enough money now in the long-term investments required to build wealth.
3. Finally, Hispanic-Latinos often struggle to access the key people and networks required to accelerate wealth generation (57%). Who you know is vital to gaining exposure and access to new opportunities, such as important partners, customers, jobs, or investments.

Despite significant barriers, more and more Hispanic-Latino families each year are building the wealth required to achieve independence and create the life they want to live. Like all Americans, Hispanic-Latinos leverage many approaches to securing their financial future. Here’s how investors of every background can leverage their leading strategies to achieve wealth.

For some, their non-Hispanic networks were a key influence on their financial journey (36%). Whether meeting new people through college or gaining access to industry associates through work, seeking connections and mentorship outside of their immediate circle is often the catalyst required to unlock new opportunities.

In addition to nurturing their non-Hispanic networks, several Hispanic-Latino investors noted that they seek to build up their Hispanic-Latino networks by acting as mentors themselves, providing the advice they wish they would have received earlier in their lives and careers.

When it comes to generating wealth, 23% of Hispanic-Latino survey respondents cite entrepreneurship as their key strategy. Not only does starting and running a business bring money in the door, but it also allows people to gain the financial education necessary to invest with confidence. As a result, most Hispanic-Latino small business owners in the survey say they are comfortable with investing (84%) and find that investing concepts are easy to understand (81%).

In addition, real estate is also considered a key wealth-building option for the majority of Hispanic-Latinos in the survey (87%). Real estate not only grows in value, but also appeals to Hispanic-Latino investors’ desire to provide security for their families. Almost half of respondents surveyed say they own at least one property (45%), with 39% saying they own two or more. Nearly all (89%) say they are at least somewhat likely to purchase real estate in the future.

To overcome educational barriers, many Hispanic-Latinos in the survey rely on the professional advice of a Financial Advisor (60%). By working with a Financial Advisor, these investors are able to put in place the financial plan required to both acquire and manage money in a way that meets both their financial and non-financial goals. Financial Advisors can also explain complex investing concepts, which respondents who find these concepts difficult say would make them more likely to invest in the future (83%). 

A Financial Advisor and their team can not only help you navigate the complexities of investing but can also build a personalized plan for you and your loved ones so you can achieve your wealth goals – however you define them.

If a dedicated Financial Advisor isn’t for you right now, you’ll find a range of modern investing solutions to help you reach your goals at E*TRADE from Morgan Stanley:

• From accounts where you make the investing decisions to
• Investing or retirement accounts we help manage for you.

¹The data in this articles comes from a research study conducted by Morgan Stanley among Hispanic-Latino investors with a net worth of over $100K. The qualitative component of the study consisted of interviews in late 2023, and the quantitative component surveyed an additional 600+ respondents in 2024.

Morgan Stanley remains committed to diversity and inclusion and sees diversity as an opportunity. By valuing diverse perspectives, we can better serve our clients. To learn more about the findings featured in this article, ask your Morgan Stanley Financial Advisor for a copy of the Morgan Stanley report, The State of Hispanic-Latino Wealth, July 2024.