MAJORITY OF U.S. INVESTORS FAIL FINRA’S INVESTING QUIZ
According to a new report released by the Financial Industry Regulation Authority (FINRA), Americans with non-retirement investment accounts are majorly unaware of fundamental investing ideas, and many are only slightly aware of the costs they’re paying.
In a ”10-question investor knowledge quiz” conducted by FINRA, the industry’s self-regulator reported that over a two-third of American adults with taxable Investment accounts wrongly responded to more than fifty percent of the questions.
HOW RESPONDENTS FAILED THE FINRA TEST
The quiz questions ranged from fundamental attributes of stocks and bonds to the relationship between risk and returns and the importance of trading on margin and short-selling. Forty-six per cent of respondents, for example, speculate that earlier performance is a promising sign of future yields. Only thirty percent realize that the advantages of index funds over vigorously regulated funds are their
MANY INVESTORS LACK BASIC FINANCIAL KNOWLEDGE
Almost one-third of investors think they’re not paying any taxes or expenses for their investment accounts, or don’t know how much they’re paying. Only 7% have tried FINRA’s BrokerCheck and only 9% have tried Investor.gov, according to the report. Some other interesting statistics:
75% of investors consider they have sufficient knowledge to make investment determinations
46% of the investors studied also admitted they depend on free online services, websites and blogs for Investment information
42% obtain their data from newspapers, magazines and books and 17% source from social media.
In a statement by Gerri Walsh, President of the FINRA Foundation and FINRA’s Senior Vice President for Investor education, the research findings underscore the need for researchers, policymakers, advocates and industry stakeholders to continue to develop and innovative investor tools and resources to better educate investors and to help protect them from fraud.
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