海角大神

鈥淎merican聽investors lack basic financial literacy,鈥� according to a newfrom the Securities and Exchange Commission (much of which is based on an earlier report by the Congressional Research Service at the Library of Congress).聽Many fail to聽grasp compound interest,聽don鈥檛 understand fees and聽other investment costs, and聽aren鈥檛聽aware about the risks of investment fraud.

From the report summary:

According to the Library of Congress Report, studies show consistently that American investors lack basic financial literacy. For example, studies have found that investors do not understand the most elementary financial concepts, such as compound interest and inflation. Studies have also found that many investors do not understand other key financial concepts, such as diversification or the differences between stocks and bonds, and are not fully aware of investment costs and their impact on investment returns. Moreover, based on studies cited in the Library of Congress Report, investors lack critical knowledge about investment fraud. In addition, surveys demonstrate that certain subgroups, including women, African-Americans, Hispanics, the oldest segment of the elderly population, and those who are poorly educated, have an even greater lack of investment knowledge than the average general population. The Library of Congress Report concludes that 鈥渓ow levels of investor literacy have serious implications for the ability of broad segments of the population to retire comfortably, particularly in an age dominated by defined-contribution retirement plans.鈥�

The report goes on to discuss ideas for increasing financial literacy and increasing the transparency of fees and other investment costs.

People聽sometimes talk about financial literacy as though the goal is helping people choose their own investments. That can be helpful, but the report rightly聽discusses another goal:聽improving consumers鈥� ability to聽work with聽financial advisers.