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Can You Answer These 4 Basic Money Questions?
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According to this article in the New York Post, most Americans cannot (though Boomers did better than Millennials... meaning they just suck a bit less ;-):

"What you don’t know can hurt you — financially.

Americans lack of knowledge about their personal finances costs them an average of $1,171 per person, according to a survey of more than 1,500 people released this month by the National Financial Educators Council. And nearly one in five estimated that their lack of know-how cost them $2,500 or more.

“If we extrapolate these results across the 240 million adults residing in the US, we can estimate that – collectively – lack of financial knowledge cost Americans more than $280 billion dollars in 2017,” the report revealed."
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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Here are the 4 Qs;

Which of the following statements describes the main function of the stock market?
A) The stock market brings people who want to buy stocks together with people who want to sell stocks.
B) The stock market helps predict stock earnings
C) The stock market results in an increase in the price of stocks
D) None of the above
E) Not sure


Result: 44% of Boomers and 39% of Millennials got it right.


If you had $100 in a savings account and the interest rate was 2 percent per year, after 5 years, how much do you think you would have in the account if you left the money to grow?
A) Exactly $102
B) Less than $102
C) More than $102
D) Not sure


Result: 82% of Boomers and 73% of Millennials got it right.


If the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year, after 1 year, how much would you be able to buy with the money in this account?
A) More than today
B) Exactly the same as today
C) Less than today
D) Not sure


Result: 73% of Boomers and 40% of Millennials got it right.


Which provides a safer return, buying a single company’s stock or a mutual fund?
A) Single company’s stock
B) Mutual fund
C) Not sure

Result: 67% of Boomers and 51% of Millennials got it right.
Last edited by: Harbinger: Jan 9, 18 4:57
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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Yes

Question 4 is not quite that straightforwards though

If they had said a tracker fund or the etf version of the same then yes but I don't think anyone would argue a IT mutual fund in the run up to the dot com bubble was safer than apple
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Re: Can You Answer These 4 Basic Money Questions? [Andrewmc] [ In reply to ]
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Andrewmc wrote:
Yes

Question 4 is not quite that straightforwards though

If they had said a tracker fund or the etf version of the same then yes but I don't think anyone would argue a IT mutual fund in the run up to the dot com bubble was safer than apple

in hindsight, it wasn't. but when mking an investing decision, you don't get the benefit of hindsight.

Anyway, I was gonna say that the answer to 4 depends on if the fund is a Ponzi scheme. https://www.reuters.com/...-fraud-idUSKBN1CA2A3

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Re: Can You Answer These 4 Basic Money Questions? [JasoninHalifax] [ In reply to ]
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JasoninHalifax wrote:

in hindsight, it wasn't. but when mking an investing decision, you don't get the benefit of hindsight.

Anyway, I was gonna say that the answer to 4 depends on if the fund is a Ponzi scheme.https://www.reuters.com/...-fraud-idUSKBN1CA2A3[/url]

True. I lean towards owning stocks not funds. But they can be propped up on fraud also. Think Enron.
Last edited by: Harbinger: Jan 9, 18 5:02
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Re: Can You Answer These 4 Basic Money Questions? [JasoninHalifax] [ In reply to ]
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But the correct answer should have been "not possible to say" without further information.

Though just getting any of the other three wrong is silly
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Re: Can You Answer These 4 Basic Money Questions? [Harbinger] [ In reply to ]
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Is the 1st one a trick question? It seems stupid easy.
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Re: Can You Answer These 4 Basic Money Questions? [Harbinger] [ In reply to ]
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Sorry, H. I didn't mean for that post to come off as some sort of click-bait thing for the New York Post. So thanks for posting the questions. (I got all four right, thank God. ;-)
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Re: Can You Answer These 4 Basic Money Questions? [knewbike] [ In reply to ]
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knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.

No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)

Bernie Madoff wants to do your investing for you ;-)

____________________________________
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)


The key word is "safer".

I know the theory is that a MF is diversified and therefore safer than an individual stock. I do not agree. The theory ignores turnover. I own many quality dividend paying stocks that I have held for years. I see many MFs (or their cousin the 'managed investment account') that have high turnover and to some degree has 'market timing' as a component. I do not find market timing safer than holding quality stock for the long term.
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Re: Can You Answer These 4 Basic Money Questions? [Harbinger] [ In reply to ]
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Harbinger wrote:
big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)



The key word is "safer".

I know the theory is that a MF is diversified and therefore safer than an individual stock. I do not agree. The theory ignores turnover. I own many quality dividend paying stocks that I have held for years. I see many MFs (or their cousin the 'managed investment account') that have high turnover and to some degree has 'market timing' as a component. I do not find market timing safer than holding quality stock for the long term.

Thanks for the info, but I just lined up a guy named Bernie-something to do my investing for me. He's supposed to be really good. ;-)
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)

I was worried so I opened the article. Thankfully I got them right.
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Re: Can You Answer These 4 Basic Money Questions? [knewbike] [ In reply to ]
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knewbike wrote:
big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)


I was worried so I opened the article. Thankfully I got them right.

I know, right? I was worried big time. ;-)
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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The lack of basic money knowledge is the US is appalling. I am I surprised with the results? Not really, in the past 5 years or so millennials are just starting to have enough money to actually invest and learn about the market.

On the bright side, in my observation younger people are more likely to question what their Edward Jones, Northwestern Mutual and other profit sucking "advisers" are really doing for them.

If I had enough money to live and didn't have to work, I'd be a personal finance teacher. Since there seems to be a great lack of personal finance teachings at home (mostly because of the stats in the article), I think it personal finance should be incorporated in high school.
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Re: Can You Answer These 4 Basic Money Questions? [AndysStrongAle] [ In reply to ]
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AndysStrongAle wrote:
The lack of basic money knowledge is the US is appalling. I am I surprised with the results? Not really, in the past 5 years or so millennials are just starting to have enough money to actually invest and learn about the market.

Agreed. It's both appalling and as far as Millennials go -- who us Boomers (and to a lesser extent GenXers) have screwed over -- it indeed is because they're just now starting to have skin in the market game.

On the bright side, in my observation younger people are more likely to question what their Edward Jones, Northwestern Mutual and other profit sucking "advisers" are really doing for them.

I'm glad to hear that, because I've found that a lot of those "advisers" basically support themselves through churning their fiduciaries' accounts. Not all of them by a long shot, because they do understand agency and what a fiduciary is, but enough to be worrisome.

If I had enough money to live and didn't have to work, I'd be a personal finance teacher. Since there seems to be a great lack of personal finance teachings at home (mostly because of the stats in the article), I think it personal finance should be incorporated in high school.

Absolutely agree with this. Personal finance (and even investing and the markets) should be covered a lot more in high school, especially as we shift from a manufacturing to a more service and market-oriented economy.
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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Last week I was talking to my 22 y/o nephew (on my wife's side), he's now pretty established in his career in the military. He was asking about investing, now that he has a paycheque. anyway, I was explaining what a fund and rrsp are, and he wanted to know a bit about stocks. He seriously believed that stocks just went up, that you couldn't lose money in the stock market.

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Re: Can You Answer These 4 Basic Money Questions? [JasoninHalifax] [ In reply to ]
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JasoninHalifax wrote:
Last week I was talking to my 22 y/o nephew (on my wife's side), he's now pretty established in his career in the military. He was asking about investing, now that he has a paycheque. anyway, I was explaining what a fund and rrsp are, and he wanted to know a bit about stocks. He seriously believed that stocks just went up, that you couldn't lose money in the stock market.

Now that worries me. But I've heard that plenty of adult students in university these days don't know what the Great Depression -- and the stock market crash -- was, including the 1929 cataclysm as well as the1987 crash. They're also unable to distinguish between WWI and WWII or draw any sort of line between the movements of markets and their broader consequences for either the economy or society.

Investors like your nephew are the ones who tend to ceaselessly watch what stocks they do own, to the point of checking on them numerous times daily, and practically tear their hair out if they lose even a penny in value. They don't understand what going long is, or what going short is, most especially.

So I'm not really sure they should even approach the stock markets until they learn something about them. And they definitely should stay away from options, probably forever. ;-)
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Re: Can You Answer These 4 Basic Money Questions? [JasoninHalifax] [ In reply to ]
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JasoninHalifax wrote:
Last week I was talking to my 22 y/o nephew (on my wife's side), he's now pretty established in his career in the military. He was asking about investing, now that he has a paycheque. anyway, I was explaining what a fund and rrsp are, and he wanted to know a bit about stocks. He seriously believed that stocks just went up, that you couldn't lose money in the stock market.

Canada has a military?
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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big kahuna wrote:
Harbinger wrote:
big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)



The key word is "safer".

I know the theory is that a MF is diversified and therefore safer than an individual stock. I do not agree. The theory ignores turnover. I own many quality dividend paying stocks that I have held for years. I see many MFs (or their cousin the 'managed investment account') that have high turnover and to some degree has 'market timing' as a component. I do not find market timing safer than holding quality stock for the long term.


Thanks for the info, but I just lined up a guy named Bernie-something to do my investing for me. He's supposed to be really good. ;-)


My dude's Nigerian, we should compare notes.

You always wonder who can fall for obvious scams, then you see results like this. Sure the majority of people got them right, but 1/4 - 1/3 of people were consistently getting them wrong.

ETA - oh shit, I didn't pay enough attention to the percentages. The millennial are dumb as a stump.

We are so fucked.
Last edited by: j p o: Jan 9, 18 8:28
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Re: Can You Answer These 4 Basic Money Questions? [big kahuna] [ In reply to ]
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woohoo 4 for 4.
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Re: Can You Answer These 4 Basic Money Questions? [j p o] [ In reply to ]
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j p o wrote:
big kahuna wrote:
Harbinger wrote:
big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)



The key word is "safer".

I know the theory is that a MF is diversified and therefore safer than an individual stock. I do not agree. The theory ignores turnover. I own many quality dividend paying stocks that I have held for years. I see many MFs (or their cousin the 'managed investment account') that have high turnover and to some degree has 'market timing' as a component. I do not find market timing safer than holding quality stock for the long term.


Thanks for the info, but I just lined up a guy named Bernie-something to do my investing for me. He's supposed to be really good. ;-)


My dude's Nigerian, we should compare notes.

You always wonder who can fall for obvious scams, then you see results like this. Sure the majority of people got them right, but 1/4 - 1/3 of people were consistently getting them wrong.

ETA - oh shit, I didn't pay enough attention to the percentages. The millennial are dumb as a
stump.
Re your last point: I don’t think we’re inherently by nature as dumb as a stump. Having just finished the k-12 process, I can say that not once did I take part in any activity that would have prepared me for a future in which I would have to be self sufficient in an economic sense.

Again, I don’t think millennials are dumb as a stump. I think the generations before failed to raise and teach us properly.
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Re: Can You Answer These 4 Basic Money Questions? [AndysStrongAle] [ In reply to ]
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AndysStrongAle wrote:
The lack of basic money knowledge is the US is appalling. I am I surprised with the results? Not really, in the past 5 years or so millennials are just starting to have enough money to actually invest and learn about the market.

On the bright side, in my observation younger people are more likely to question what their Edward Jones, Northwestern Mutual and other profit sucking "advisers" are really doing for them.

If I had enough money to live and didn't have to work, I'd be a personal finance teacher. Since there seems to be a great lack of personal finance teachings at home (mostly because of the stats in the article), I think it personal finance should be incorporated in high school.

Personal finance is a required half-year course in our local high school.

----------------------------------
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Re: Can You Answer These 4 Basic Money Questions? [Koala Bear] [ In reply to ]
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Koala Bear wrote:
j p o wrote:
big kahuna wrote:
Harbinger wrote:
big kahuna wrote:
knewbike wrote:
Is the 1st one a trick question? It seems stupid easy.


No trick questions, though the super-genius finance bubbas here in the LR apparently have some heartburn with #4. ;-)



The key word is "safer".

I know the theory is that a MF is diversified and therefore safer than an individual stock. I do not agree. The theory ignores turnover. I own many quality dividend paying stocks that I have held for years. I see many MFs (or their cousin the 'managed investment account') that have high turnover and to some degree has 'market timing' as a component. I do not find market timing safer than holding quality stock for the long term.


Thanks for the info, but I just lined up a guy named Bernie-something to do my investing for me. He's supposed to be really good. ;-)


My dude's Nigerian, we should compare notes.

You always wonder who can fall for obvious scams, then you see results like this. Sure the majority of people got them right, but 1/4 - 1/3 of people were consistently getting them wrong.

ETA - oh shit, I didn't pay enough attention to the percentages. The millennial are dumb as a
stump.

Re your last point: I don’t think we’re inherently by nature as dumb as a stump. Having just finished the k-12 process, I can say that not once did I take part in any activity that would have prepared me for a future in which I would have to be self sufficient in an economic sense.

Again, I don’t think millennials are dumb as a stump. I think the generations before failed to raise and teach us properly.

You also don't take responsibility for your actions. :)

We are so fucked.
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Re: Can You Answer These 4 Basic Money Questions? [Koala Bear] [ In reply to ]
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Quote:
Again, I don’t think millennials are dumb as a stump. I think the generations before failed to raise and teach us properly.

Say what ?
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