Americans lack the knowledge and confidence to invest, a new survey finds. Here are some resources to get you started in investing.
Melanie Stetson Freeman/The Christian Science Monitor
Are you a knowledgeable investor? Try this quiz:
If you said: brokerage account, more than $150,000, and low prices, then congratulations. You're far ahead of most Americans, whose grasp of investing is rudimentary.
The three questions above caused the most problems for the 869 adults in a new investment literacy survey conducted by InvestingNerd. For example: 4 in 5 couldn’t identify a brokerage account; 9 in 10 severely underestimated how much a 401(k) would cost them (because beyond the stated fees are the trading costs, which also sap returns); and while over half of the current investors in the survey said low prices were most important to them in picking an online broker, only 1 in 10 actually took the time to compare costs across accounts when making their choice.
No wonder so many Americans don’t invest! They lack the knowledge and confidence to feel they are doing a good job at it.
Over a quarter of non-investing respondents said they avoided investing altogether because of either uncertainty on how to get started (13.6 percent) or not wanting to risk losing money (12.8 percent). A full 39.3 percent said they did not invest because they do not have enough money to do so.
Investing is a key pillar of a strong personal finance foundation. These results all point to one thing – knowing how to get started, and what to look for once you are ready to invest – is half the battle.
So where should you look for help? Here are three places where people can get started learning about basic investing concepts:
– Susan Lyon is a financial analyst with InvestingNerd (a division of NerdWallet), which seeks to empower investors by providing unbiased and transparent access to investing and financial markets information.