Stunning Financial Illiteracy
Most Americans can’t answer these 3 basic financial questions correctly
Investment advisor regulator Finra has a financial literacy quiz that includes the following three basic questions:
1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
3. Do you think that the following statement is true or false? ‘Buying a single company stock usually provides a safer return than a stock mutual fund.’
c) Do not know
Among Americans, only one-third of respondents could answer all three of these questions correctly (a, c, b).
Posted by Jill Fallon at June 19, 2014 7:01 PM
Financial literacy has proven a very tough nut to crack - no programs or approaches seems to be working very well.