By the Numbers: Financial literacy

Transcript:

Hello, I’m George Moriarty and this is By The Numbers!

Today, we’re talking about Investor Confidence and the number of the day is 20!

This comes from two recent studies from the FINRA Investor Education Foundation and NORC at the U of Chicago. In the first study, the headline was that 20% indicated an INCREASED interest in investing in 2020. That’s right folks, in the throes of COVID-19, one in five people are paying more attention to investing. Importantly, the respondents in this survey were aware of the volatility in the market, and four in 10 did cite that they were less willing to take on risk.

But that raises some concerns around investor education and financial literacy that were unearthed in the second study.

“A lack of investment knowledge may result in suboptimal investment decisions, especially during times of market disruptions,” said Gerri Walsh, president of the Finra Investor Education Foundation. “As new investors enter the stock market, it will be critical that they take advantage of unbiased educational resources to help them understand risks and manage market volatility.”

This study also reinforced the gap in financial education in different demographics. And that gap in understanding was underscored by a third report, where  10,508 people participated in a test that asked questions about inflation’s impact on purchasing power and bond prices, among other things.

So while interest in investing is a good thing, we all need to keep working on understanding too.

That’s all for this week. I’m George Moriarty, and from my home office to yours, stay safe and we’ll see you next week.