People tend to think they know more about investing than they actually know.
That was a finding of a report done for the U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy by the Library of Congress’ Federal Research Division and presented at an Oct. 18 financial literacy seminar at GWSB.
The study – a synthesis of the findings of 11 other financial literacy reports –was intended to shed light on what individual investors know and what mistakes they make.
“People tend to overemphasize what they know,” said Seth L. Elan, senior research analyst for the division, who presented the report’s major points at the seminar. “There’s this huge disconnect between actual knowledge and self-assessment.”
Elan said the report’s main finding was there are “relatively low levels of financial literacy among Americans.” There is also an “acute need” for financial education among certain groups who scored particularly low, such as women, the elderly and some minority groups.
Among other findings:
- Financial literacy tends to increase with age.
- Just 25 percent of respondents knew that mutual funds are classed by the fees they charge.
- A slight majority – 52 percent – knew that mutual funds are less risky, as investments, than the stock of a single company.
Another presentation was made by Mary S. Head, deputy director of the SEC office.
The Financial Literacy Seminar Series (FLSS), a joint initiative between the Board of Governors of the Federal Reserve System and GWSB, brings together academics, practitioners, policymakers, and other experts to present and discuss cutting-edge research on financial literacy. It is spearheaded at the School by Annamaria Lusardi, Denit Trust Distinguished Scholar in Economics and Accountancy and director of the Global Center for Financial Literacy. For more on the investment knowledge seminar, go here.
Posted by gwsb on October 24, 2012 | Filed under: GWSB News.