Study Many Lack Basic Investment Knowledge
Below is a MRR and PLR article in category Finance -> subcategory Investing.
Study Reveals Many Lack Basic Investment Knowledge
A recent study by American Century Investments highlights a concerning gap in basic investment knowledge among individuals. The "On Plan I.Q. Quiz," which consisted of 10 questions and was taken by over 800 investors, revealed that many participants struggled with fundamental investment concepts. On average, test-takers answered only half of the questions correctly. The quiz targeted those with investments outside company retirement plans.
Doug Lockwood, vice president of investor guidance at American Century Investments, noted, "While Americans have been increasingly taking charge of their financial futures, many still lack essential investment knowledge, which hampers their ability to achieve financial goals."
The study found that portfolio rebalancing was particularly confusing for participants. When presented with three statements about rebalancing, only 13 percent chose the correct one. While most understood that rebalancing adjusts a portfolio back to its ideal asset allocation, they were puzzled by the idea that it often requires selling high-performing investments to buy those that haven't done as well.
Despite these challenges, participants showed a better grasp of basic investment practices. For example, 71 percent recognized that a well-diversified portfolio tends to experience less volatility.
Investors were split on their confidence in achieving long-term savings goals. Lockwood emphasized, "Financial empowerment begins with quality financial education and guidance."
This study underscores the importance of improving financial literacy to better equip individuals for successful investment strategies.
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