Most Americans Fail This Simple Financial Quiz

[LJF]

Can this be real?

These questions stump most Americans with college degrees.


Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? (A) More than $102. (B) Exactly $102. (C) Less than $102.

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? (A) More than today. (B) Exactly the same. (C) Less than today.

Please tell me whether this statement is true or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.


Since there are not only Americans here, can we do better?

[mockbee]

spoiler


































A,C, False


But, I think your test is flawed.

It assumes that people with college degrees actually have the kind of money in the bank where it would matter if the interest was 1% or 2%, if you are talking an extra couple dollars a year, why would they care to become financially savvy? You will say, but it's just basic math. And yes, you are correct, but a lot of college grads don't really care about "basic" math.

Inflation sucks, and if you aren't raking in 6 figures or above and have the resources (capital, time, smarts) to have a financial planner, you're screwed.

Buying stock?!?! What college grad is buying stock. Sure some middle class folks, who see it primarily as a fun hobby, like going to the casino, or buying lottery tickets for the plebians. But why do they need to know this? Sure there are state jobs and some corporate jobs where you can get 403 (B) or get in at Charles Shwab, but that's pretty much on orientation day saying, oh, and now you are signed up for your 401 (K), great, thanks! and that's it.





Glad to see you around LJF!

It's nice to have a different perspective around.

[clickie]

Hey Ljf. Can you post that Perry interview from Raygun magazine.

[creep]

this one?

http://janesaddiction.org/gallery/artic ... mber-1997/

[LJF]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

I've been around just trying to keep out of the fray.

Does our Etty know these answers?

[mockbee]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

I've been around just trying to keep out of the fray.

Does our Etty know these answers?

I agree that people should know the answers to those questions. I don't think they are dumb questions. I think they are inconsequential questions for most Americans though (like 80-90% of them). They don't make the kind of money where the questions would apply to them. Get 1% or 2% interest, you are talking a couple bucks a year difference?? And yes, millions and millions have retirement accounts, but that is by and large just something they sign up for, and don't necessarily really pay close attention to until it's about time to retire. That is what I see.

Etty doesn't give a shit about this. Her money comes from Perry, she expects him to work it out. And I bet he hires an advisor, so really doesn't understand the specifics either. Yes, they are "easy" questions you found and posted and all people "should" know the answers to them, my point is, they are inconsequential to them, I bet even to Perry just has his advisor takes care of it.......

[Hype]

Can this be real?

These questions stump most Americans with college degrees.


Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? (A) More than $102. (B) Exactly $102. (C) Less than $102.

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? (A) More than today. (B) Exactly the same. (C) Less than today.

Please tell me whether this statement is true or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.


Since there are not only Americans here, can we do better?

(A) and (C) and false, I guess... I might not understand what's being asked though...

Actually, most ordinary folk DO care about inflation and the difference between credit and debit interest... everyone loves to complain about price increases when they notice them, though usually this ignores inflation. If bread were sold for a nickel in 1950 and production costs remained the same, it should be sold for 48 cents today. Of course, there are other factors: wheat and dairy subsidies/lack thereof, supply-chain, middle men, etc... that can have a greater effect than inflation (hence $3-4 for bread...).

One interesting side-bar: LJF clearly understands how inflation works. Yet past discussions have suggested he doesn't think the lowest wages should, at the very least, track, or be indexed to, inflation. I don't know if he still thinks that... or if he thinks it's those other contingencies that make minimum wages exempt from currency devaluation over time... but it's interesting.

Inflation doesn't have to suck, btw... it's a natural side-effect of progress. But the way markets/governments respond to it can suck.

[mockbee]

Can this be real?

These questions stump most Americans with college degrees.


Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? (A) More than $102. (B) Exactly $102. (C) Less than $102.

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? (A) More than today. (B) Exactly the same. (C) Less than today.

Please tell me whether this statement is true or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.


Since there are not only Americans here, can we do better?

(A) and (C) and false, I guess... I might not understand what's being asked though...

Actually, most ordinary folk DO care about inflation and the difference between credit and debit interest... everyone loves to complain about price increases when they notice them, though usually this ignores inflation. If bread were sold for a nickel in 1950 and production costs remained the same, it should be sold for 48 cents today. Of course, there are other factors: wheat and dairy subsidies/lack thereof, supply-chain, middle men, etc... that can have a greater effect than inflation (hence $3-4 for bread...).

One interesting side-bar: LJF clearly understands how inflation works. Yet past discussions have suggested he doesn't think the lowest wages should, at the very least, track, or be indexed to, inflation. I don't know if he still thinks that... or if he thinks it's those other contingencies that make minimum wages exempt from currency devaluation over time... but it's interesting.

Inflation doesn't have to suck, btw... it's a natural side-effect of progress. But the way markets/governments respond to it can suck.

No doubt ordinary folks care about inflation, but I doubt many understand it and how it is different than a business just raising prices. I hardly understand where those lines blur.

I also care about interest, but am so frustrated with the options for CDs, money markets, your everyday bank account interest - it's all a pittance to those making under 6 figures. People do care, just don't understand and with many of their financial situations wouldn't matter much anyways.

LJF, if you want to make positive change for the regular folks (or really struggling folks which are a lot), I would say focus the energy on getting people to understand predatory lending, check cashing services, banking fees and wages indexed to inflation, like hype said. THAT would be important for your everyday folks. Not whether they can rake in $5 or maybe if they are really shrewd, $7!!! a year on their capital sitting in the bank.

[mockbee]

Inflation .......the way markets/governments respond to it can suck.

That's what I meant, and right now inflation is amazingly stable it seems, as much as I understand it, which isn't much.

[Hype]

Inflation .......the way markets/governments respond to it can suck.

That's what I meant, and right now inflation is amazingly stable it seems, as much as I understand it, which isn't much.

The cool thing about how stable it has been is that that can make it easier to see how easy it is for banks to make money off your money. They offer you an interest rate below inflation, and then charge fees (or interest on lines of credit) that look low, but effectively negate interest they pay out. It's really difficult to really internalize the fact that the money you made 10 years ago was literally worth more (if you spent it then) than the money you make now... so if your salary is the same, or hasn't increased more than the rate of inflation each year, you're actually making less. Meanwhile, your money has less purchasing power. There are a lot of products that are cheaper now than they were, especially electronics... but this is mostly because economies of scale can mitigate inflation. Perpetual, necessary goods like food and clothing are much more likely to resist this.

[Pandemonium]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

I've been around just trying to keep out of the fray.

Does our Etty know these answers?

A - Perry. B - Perry. C - True. No, false. Maybe true AND false. Is it happy hour yet?

[mockbee]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

[creep]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

everyone is being so sensitive with ljf now to not piss him off again and make him go away again.

most paycheck to paycheck people should at the minimum be investing what ever their company matches in their 401k plan. even if it is as little as 3% that instantly becomes 6% with the company match.

if you say they can't afford the three percent maybe they should look at their cable and phone bills.

[mockbee]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

everyone is being so sensitive with ljf now to not piss him off again and make him go away again.

most paycheck to paycheck people should at the minimum be investing what ever their company matches in their 401k plan. even if it is as little as 3% that instantly becomes 6% with the company match.

if you say they can't afford the three percent maybe they should look at their cable and phone bills.

Without a doubt, match employer contributions and put whatever you can into 401 (K) but so many places don't even have that anymore.

Employer sponsored retirement is a no brainer, and should be well understood by everyone.

Just private "investing" I don't think should be high on a priority list, unless it's just a fun hobby or something, and not jeopardizing something else.

[creep]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

everyone is being so sensitive with ljf now to not piss him off again and make him go away again.

most paycheck to paycheck people should at the minimum be investing what ever their company matches in their 401k plan. even if it is as little as 3% that instantly becomes 6% with the company match.

if you say they can't afford the three percent maybe they should look at their cable and phone bills.

Without a doubt, match employer contributions and put whatever you can into 401 (K) but so many places don't even have that anymore.

Employer sponsored retirement is a no brainer, and should be well understood by everyone.

Just private "investing" I don't think should be high on a priority list, unless it's just a fun hobby or something, and not jeopardizing something else.

a roth ira is a pretty great private retirement investment.

just put it in to something pretty low risk.

[LJF]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

I think it is important for people to understand yes whether you are invested or not. I think you are making this into something bigger, I was just wondering if people on this board knew the answers. From my experience on here everyone seems intelligent, so I thought this would be a good gauge.

I can't really get into investing that could get me fired. That's not a joke. In general I think people should understand these things, especially if we as a country or even the world want to discuss bigger issues about wealth.

Also as fewer and fewer people get pensions and well you knows what social security will look like in 20-30 years. People will need to understand these types of things. Also if they want to protect themselves against some of the other things you mentioned, being more financially literate will be helpful.

Creep I hope you weren't serious about not trying to piss me off, which I don't think you were. I never left as I said I've been trying to stay out of the fray. Working on trying to put out good energy. I feel the collective energy is rather negative and don't want to contribute to that or absorb it.

[mockbee]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

I think it is important for people to understand yes whether you are invested or not. I think you are making this into something bigger, I was just wondering if people on this board knew the answers. From my experience on here everyone seems intelligent, so I thought this would be a good gauge.

I can't really get into investing that could get me fired. That's not a joke. In general I think people should understand these things, especially if we as a country or even the world want to discuss bigger issues about wealth.

Creep I hope you weren't serious about not trying to piss me off, which I don't think you were. I never left as I said I've been trying to stay out of the fray. Working on trying to put out good energy. I feel the collective energy is rather negative and don't want to contribute to that or absorb it.

It's awesome you're here LJF, I don't really care why you left or stay or whatever.

I think your insight as a financial person (I don't expect any sort of financial advise) is actually fascinating. Just your outlook on things. It is a perspective that is missing from most discussions by the liberal populace. I probably won't agree with some things you say, but your vantage point is interesting, and often the interactions don't happen because of this divide you are talking about.

[mockbee]

A,C, False

oh...... did I get it right?

[LJF]

This wasn't my test it was something I read and I found interesting and sad. They seemed to me to be some basic questions that are important for people to know or at least understand. Do you really think everyone shouldn't understand these types of things?

Not trying to call you out again, just honestly have a question for you.

Do you believe that it is important for joe public to understand the ramifications of getting 1% vs 2% return on their savings? How much do you think they have in the bank?

Do you believe that a person or family living paycheck to paycheck should be investing their money differently, other then just letting it sit in a 1% return savings, maybe it's $2-3,000, if they are doing pretty okay otherwise? You seem to imply that they should be doing something different. That's the only reason I ask. Or why would this knowledge that these questions ask have a real impact on day to day finances for the vast majority of Americans?

I'm not trying to bust your balls. If you have an answer to this, I am totally all ears.

I think it is important for people to understand yes whether you are invested or not. I think you are making this into something bigger, I was just wondering if people on this board knew the answers. From my experience on here everyone seems intelligent, so I thought this would be a good gauge.

I can't really get into investing that could get me fired. That's not a joke. In general I think people should understand these things, especially if we as a country or even the world want to discuss bigger issues about wealth.

Creep I hope you weren't serious about not trying to piss me off, which I don't think you were. I never left as I said I've been trying to stay out of the fray. Working on trying to put out good energy. I feel the collective energy is rather negative and don't want to contribute to that or absorb it.

It's awesome you're here LJF, I don't really care why you left or stay or whatever.

I think your insight as a financial person (I don't expect any sort of financial advise) is actually fascinating. Just your outlook on things. It is a perspective that is missing from most discussions by the liberal populace. I probably won't agree with some things you say, but your vantage point is interesting, and often the interactions don't happen because of this divide you are talking about.

I get the liberal view point all the time. My wife is a card carrying Democrat that comes from a family that is so liberal well they would blend in here very well. I'd have to say I'm more socially liberal and fiscally conservative. That's just to make it simple. I just question everything.

[creep]

A,C, False

oh...... did I get it right?

you shouldn't have to ask

[mockbee]

A,C, False

oh...... did I get it right?

you shouldn't have to ask

I wanted to see if that constituted financial advice......

I think it did.

(we bust everybody's balls here LJF, you aren't special )

[Mescal]

You get less than $100, with all the fees the banks are actually charging you ... the 2% a year won't cover them

[mockbee]

You get less than $100, with all the fees the banks are actually charging you ... the 2% a year won't cover them

Exactly. That's why these questions are inconsequential.

Most banks, even some Credit Unions!, charge you if you have less than $500 in the bank. THEY CHARGE YOU!! Enter cash checking services, where they grab $25 of that $1000 pay check you just got.

Yes those are crappy rates, but they are prolific. There is a reason for that. Because they can.


Bigger fish.




Oh sorry, I thought I was being brash when I said $500 minimum balance for a checking account.

Here is from Bank of America main page:

Convenient access to your personal checking account wherever, however you want.

No monthly maintenance fee when you meet one of the following requirements each monthly statement cycle:
Have at least one qualifying direct deposit of $250 or more; or
Maintain an average daily balance of $1,500 or more; or
When you are a Bank of America Preferred Rewards client (waiver applies to first 4 checking and savings accounts)
Otherwise, $12 monthly maintenance fee.