December 3, 2003
AH, INVESTOR LITERACY!
Boy, you just can't beat a good survey.The number of respondents who reported owning stocks (67%) was higher than those who own mutual funds (60%).
On December 2, 2003, the National Association of Securities Dealers (NASD, for short) released the findings of an investor-literacy survey which it conducted for a week back in April. Over 1,080 people answered the 55-question survey, which covered basic investment topics like stocks, mutual funds, and bonds. Considering the fact that 68% of the respondents reported that they had $10,000 or more in investments, and 35% had $50,000 or more invested, you might think that these folks would be fairly heady when it comes to investing basics. Unfortunately, that doesn't appear to be the case.
Without reading too much into a survey of only one thousand people, I'll just run through a couple of the findings that jumped out at me:
Seems hard to believe, since mutual funds are generally regarded as the investment of choice for people who bother to invest in the stock market. Funds do require, after all, the least ongoing attention and "maintenance" on the part of the investor. But who says people dutifully follow their stocks as well as they should, anyway?Fully 62% of respondents either thought their funds were insured against stock-market losses, or did not know whether they were or not.
Oh, brother. If this is really true, there are lots of people out there who have no business sending money to their brokerage accounts — and maybe not even to their 401k accounts — until they take the time to educate themselves about where their money is going.
Really, the NASD's 10-page report (PDF format) is pretty interesting, so if you've got a minute, you might wish to download and read it here.
If you're feeling lucky, you can take a similar quiz here.
December 3, 2003
Play Great Defense