From Financial Planning Magazine:
A new report released by FINRA’s Investor Education Foundation shows why, and perhaps casts light on why financial planning has been ranked as one of the best careers.While roughly 75% of Americans have “positive perceptions” of their own financial knowledge and math skills, a meager 14% were able to correctly answer five financial literacy questions compiled by FINRA’s investor education foundation. Advisors point to the dire need for financial literacy classes at US high schools and colleges.
I took the quiz and was surprised at how basic it is. Most require no more than basic math or a very rudimentary knowledge of Investing 101.
“This survey reveals that many Americans continue to struggle to make ends meet, plan ahead and make sound financial decisions — and that financial literacy levels remain low, especially among our youngest workers. No matter how you slice and dice it, this rich, new dataset underscores the need for us to continue to explore innovative ways to build financial capability among consumers,” says FINRA Foundation Chairman Richard Ketchum in a statement.
Please go to the FINRA website and check it out for yourself.
There is one other thing going on that bothers me. Keep in mind that only 14% of people who took the quiz were able to answer very, very basic questions about investing. Yet the popular press is constantly telling its readers that all they need to do is put their money in index funds when many people can’t tell you what a mutual fund is. This is like handing a child a pair of scissors and telling him to go run … in traffic. Of course, telling people that they can do-it-yourself by reading their newspaper, magazine or newsletter is a pretty good way of making money on subscriptions, but for most it’s a very poor way of saving for a home, college or retirement.
If you took the quiz and failed to get 5 out of 5 right, you need us.