In his article, Jeff Sommer explains an interesting situation that could put average Americans at risk financially. He cites a Finra Investment Education Foundation study which surveys more than 25,000 people to assess their financial knowledge, attitudes and well being. He says the findings are, for the most part, not promising,
In fact, they suggest that misplaced self-confidence is putting millions of people at risk. They are vulnerable to major missteps — and to exploitation by industry pros who may not have their best interests at heart.
Over all, the study found that most Americans have “relatively low levels of financial literacy.” It included the results of a six-question quiz on fundamental financial issues that may be taken online. The questions were intended to be very basic and thus easy. Yet the average person got only about half the answers right.
Five of the questions have been on the quiz for years, making statistical comparisons possible. The trend is not encouraging. Only 37 percent of the people who took the quiz were able to get four of these five questions right in 2015. That compares with 39 percent in 2012 and 42 percent in 2009.
The worst performance was on a question about how bond prices respond to rising interest rates. Only 28 percent of people in 2015 got that one right.
Continue reading the full story here: What You Think You Know About Money, but Don’t, Can Hurt You
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal