... for saving for retirement.
The study asked a series of questions that most participants got wrong... no surprise there, but if anyone on this forum can't get all six questions correct you haven't been paying attention:
Here are the six literacy questions. Nearly no one got all six right--68 out of nearly 14,250 tested, or fewer than 1 in 200. The fourth question was the most challenging. See how you do (the correct answers follow):
1. Chance of Disease: If the chance of catching an illness is 10 percent, how many people out of 1000 would get the illness?
2. Lottery Division: If five people share winning lottery tickets and the total prize is two million Chilean pesos, how much would each receive?
3. Numeracy in Investment Context: Assume that you have $100 in a savings account and the interest rate you earn on this money is 2 percent a year. If you keep this money in the account for five years, how much would you have after five years? Choose one: more than $102, exactly $102 or less than $102.
4. Compound Interest: Assume that you have $200 in a savings account, and the interest rate that you earn on these savings is 10 percent a year. How much would you have in the account after two years?
5. Inflation: Assume that you have $100 in a savings account and the interest rate that you earn on these savings is 1 percent a year. Inflation is 2 percent a year. After one year, if you withdraw the money from the savings account, you could buy more/less/the same?
6. Risk Diversification: Buying shares in one company is less risky than buying shares from many different companies with the same money. True/False
Answers:
1. 100
2. 400,000 pesos
3. More than $102
4. $242
5. Less
6. False
Why We're Not Wired for Successful Retirements - Yahoo! Finance=
The study asked a series of questions that most participants got wrong... no surprise there, but if anyone on this forum can't get all six questions correct you haven't been paying attention:
Here are the six literacy questions. Nearly no one got all six right--68 out of nearly 14,250 tested, or fewer than 1 in 200. The fourth question was the most challenging. See how you do (the correct answers follow):
1. Chance of Disease: If the chance of catching an illness is 10 percent, how many people out of 1000 would get the illness?
2. Lottery Division: If five people share winning lottery tickets and the total prize is two million Chilean pesos, how much would each receive?
3. Numeracy in Investment Context: Assume that you have $100 in a savings account and the interest rate you earn on this money is 2 percent a year. If you keep this money in the account for five years, how much would you have after five years? Choose one: more than $102, exactly $102 or less than $102.
4. Compound Interest: Assume that you have $200 in a savings account, and the interest rate that you earn on these savings is 10 percent a year. How much would you have in the account after two years?
5. Inflation: Assume that you have $100 in a savings account and the interest rate that you earn on these savings is 1 percent a year. Inflation is 2 percent a year. After one year, if you withdraw the money from the savings account, you could buy more/less/the same?
6. Risk Diversification: Buying shares in one company is less risky than buying shares from many different companies with the same money. True/False
Answers:
1. 100
2. 400,000 pesos
3. More than $102
4. $242
5. Less
6. False
Why We're Not Wired for Successful Retirements - Yahoo! Finance=