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22 November 2024

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US Survey on financial capability shows poor results

 

The Wall Street Journal article, 'So You Think You're a Financial Genius', reports on findings from the latest National Financial Capability Study.

There is a widening gap between what we think we know about investing and what we actually know. Much like most people think they are above average in driving ability, nearly three quarters of the 25,000 American adults surveyed awarded themselves above-average marks for financial capability.

But when given a simple five-question quiz, only 39% of respondents were able to correctly answer at least four questions.

For example, one quarter of those surveyed couldn't say whether $100 deposited in a savings account earning 2% interest per year would grow to more than $102, less than $102 or exactly $102 after five years.

(Answer: $110.41—$100 grows to $102 the first year, $102 grows to $104.04 the second year, and so on.)


 

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