Most 20-Somethings Can’t Answer These 3 Financial Questions. Can You?

[JM Aggie08]

Oh look, one of these threads again.

 

[pete6032]

You know that those that could NOT answer those questions would vote and demand breaks/help, right? Just look at the idiots with crappy degrees/dropouts and huge student loan debts want breaks already.

...aaand we've just cross the P&N barrier folks. The forecast is calling for turbulence ahead. :'(

 

[rcpratt]

I am clueless on question #1

But I don't live in America and buying stocks aren't as common here for the average person. This might be indicative of my social class but I don't personally know anyone who actually owns any.

The question asks about the risk of two potential investments. A mutual fund is comprised of various different stocks and equity positions, whereas a single stock represents just that single corporation. A more diverse investment theoretically leads to less risk.

Some of you are trying to make it way too complicated. Yes, obviously you don't invest in a mutual fund with 2% fees. This question is not even to that level of detail.

 

[Svnla]

Sure, if you are stupid enough to pay for everything via debit cards (throwing away security and credit card rewards)... Sure... more power to you.

There is always a cap on that reward dividend as well.

You do NOT purchase large amount items to fullfill the debit requirement because they only count the quantity of debit usage per month. You only have to buy small value items. In my case, they were all less than $1 and I was able to reuse those items for something else for my business.

You go around the cap by open more reward checking accounts at other banks/CUs. There is a will, there will be a way.

 

[pauldun170]

This is scary, and they are the future of America?

(1) Do you think that the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund.

(2) Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: More than $102, exactly $102, or less than $102?

(3) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

http://time.com/money/3826475/financial-literacy-month-3-basic-questions-millennials/

'
BS article with BS premise. It's click bait for the target demographic so they can feel good about themselves. some of the talking points generated from the study are sourced from a survey taken in 1997.

Hell random link at bottom of page
This One Question Can Show If You’re Smarter Than Most U.S. Millennials

This crap is written to play to the insecurities of its readership.

As for the three questions

(1) Do you think that the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund.

A lot of adults will get this wrong. It's called the "thingee" rule. They may not directly manage the details of their portfolio so they forget terminology. In some cases, people do not track their investments on a regular enough basis where they can easily respond to this question in a timely manner.

(2) Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: More than $102, exactly $102, or less than $102? (3) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

This one is fairly predictable. You have people will look at this, see "surprise math" and instantly go brain dead. Has nothing to do with finance\money\saving\ etc. You will get a % of respondents who will see the $100. Then they will see the 2%. They will have a brain fart.

I could take this to my PTA meeting and I bet more than 50% of the well to do, middle class adults will blow these questions. This includes some very well educated people.

Wonder if this is related to https://www.google.com/search?q=Bet...ney+Habits+Millennial+Report&safe=off&tbm=nws

 

[Dulanic]

Mutual funds are a dying industry because they're overly diversified and loaded with fees. I would take a share of BRKA or a publicly traded REIT over any mutual fund.

More preferably an ETF to minimize risk though.

It's scary how high the fees are on most mutual funds. I own mutual funds, but they are almost always vanguard and are index funds which tend to have low fees.

 

[monkeydelmagico]

'

I could take this to my PTA meeting and I bet more than 50% of the well to do, middle class adults will blow these questions. This includes some very well educated people.

Do it. Report back.

I tend to agree with your hypothesis and the reasoning why MSM find this sort of rubbish "news worthy".

There have been so many shows that do "man on the street" type trivia questions. It doesn't seem to matter what your age is, there is a whole lot of derp out there.

 

[pauldun170]

Do it. Report back.

I tend to agree with your hypothesis and the reasoning why MSM find this sort of rubbish "news worthy".

There have been so many shows that do "man on the street" type trivia questions. It doesn't seem to matter what your age is, there is a whole lot of derp out there.

lol...
I do have a meeting tomorrow night.
Not sure I want to be the weirdo with oddball questions...

 

[norseamd]

This crap is written to play to the insecurities of its readership.

 

[monkeydelmagico]

lol...
I do have a meeting tomorrow night.
Not sure I want to be the weirdo with oddball questions...

It's for science and they already know your a weirdo so grab your sack and git er done. :biggrin:

 

[BoberFett]

http://time.com/money/3826475/financial-literacy-month-3-basic-questions-millennials/

I just want to point out that the girl in the article photo es muy caliente.

 

[gorcorps]

Look...

Every single generation has had morons. The change with the newest generation is every moron has an internet connected camcorder on them 24/7 and you can easily see just how stupid they are on a much more consistent basis. Going around work and talking to people from the previous generation (and beyond) has me convinced that we've been living with morons for a very long time.

 

[stlc8tr]

Mutual funds are a dying industry because they're overly diversified and loaded with fees. I would take a share of BRKA or a publicly traded REIT over any mutual fund.

More preferably an ETF to minimize risk though.

Hah. Yeah, I think most people would prefer to own shares in BRK.A too (currently trading at around $214,000 per share).

 

[pete6032]

I just want to point out that the girl in the article photo es muy caliente.

She got a boob job instead of saving for her retirement.

 

[JMapleton]

But I don't live in America and buying stocks aren't as common here for the average person. This might be indicative of my social class but I don't personally know anyone who actually owns any.

Are you serious? You don't know one person who owns any stock? Even mutual funds (basket of stocks) in a 401k?

 

[uhohs]

You can get 2% or higher (4.11%) with reward checking accounts.

4.11%, which one are you referring to?
http://www.gibslandbank.com/personal/checking/reward-checking.html
? or another one.

 

[s0me0nesmind1]

You do NOT purchase large amount items to fullfill the debit requirement because they only count the quantity of debit usage per month. You only have to buy small value items. In my case, they were all less than $1 and I was able to reuse those items for something else for my business.

You go around the cap by open more reward checking accounts at other banks/CUs. There is a will, there will be a way.

Yeah, I know.

I simply don't have the time anymore. I did that for Bank of America's "Keep the change" program that matched the first $250. I would do $1.01 transactions in order for it to do $0.99 in "Keep the change", and over the course of 90-days it would match any of that up to $250.

The ONLY way I was able to do that was with my cell-phone bill that would let me charge $1.01 multiple times. I couldn't do shit like go to the gas station every-day and try to do it there. I tried it once and it blocked me out from doing it again on the 2nd or 3rd transaction.

Point being, the whole doing multiple transactions is a PAIN. I changed cell-phone providers and I'm not sure if they let me do small transactions multiple times like my previous. And for each account (since you mention opening more of them), that is another set of transactions you have to do.

I do need to find some better banks though... maybe I'll move to the online one's. I'm only with Chase/Bank of America because of opening bonus' I milked them for ($300 @ Chase, $200 + $950 in Keep the change @ BoA).

 

[s0me0nesmind1]

Hah. Yeah, I think most people would prefer to own shares in BRK.A too (currently trading at around $214,000 per share).

BRKA? Really? Berkshire has had a HORRIBLE record. I'll stick with my safe, yet very profitable Vanguard's. Fee's are RIDICULOUSLY low. I think in the last YoY gains were @ 16%

REIT? After the last housing bubble and talks of another? Ugh, even that I am weary of, but I would be willing to put a little in for the sake of diversification.

 

[Ichinisan]

I am clueless on question #1

But I don't live in America and buying stocks aren't as common here for the average person. This might be indicative of my social class but I don't personally know anyone who actually owns any.

I don't invest either and I don't know anyone who does. I make poor financial decisions and have little-to-no money at any given time...but I know the answer to question # 1.

The point is, putting all your eggs in one basket (one stock) means you lose EVERYTHING if that company fails. Using a mutual fund invests in many entities, so you aren't depending on the success of just one.

You don't even want to invest everything in multiple companies within the same industry or sector because some new technology or legislation might destroy all of it. Diversification is a safety measure.

[edit]
...but I am paying into a 401K that I don't manage at all.

 

[slayer202]

1) that's ridiculous

2) I doubt it is limited to young people

 

[z1ggy]

If you can't answer those questions, you need help.

This. If you can't answer those, I assume you're not adding much value to society.

 

[pete6032]

2) I doubt it is limited to young people

Yeah but if they didn't give the piece the millenial hate perspective, then angry Gen-Xers would not have clicked the link.

Also as pauldun170 pointed out, some of the data are from a survey conducted in 1997. If we assume they could only survey 18+ people in the year 1997, that would mean the youngest person relavent to this article would now be 36 years old, which in my mind is not even a millenial.

 

[clamum]

I found them easy but maybe I totally failed. :awe:

This is scary, and they are the future of America?

(1) Do you think that the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund.
False

(2) Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: More than $102, exactly $102, or less than $102?
More than $102

(3) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
Less than today

http://time.com/money/3826475/financial-literacy-month-3-basic-questions-millennials/

I'm 32 but I'm pretty sure I would've answered the same if I was 18 or even younger.

 

[xeemzor]

These questions might be stupidly easy but the reality is that people under 30 save very little. To be in the top 10% of retirement savings you only need $50k by 30.

 

[Lonyo]

Many people get outraged against finance related things despite having zero understanding of anything.

One obvious and recurring example in the UK would be corporation taxes. Sometimes it's justified (e.g. Starbucks UK paying Starbucks Switzerland royalties for the brand name/etc to reduce taxes), but sometimes it's not.
All too often the media talks about how a company (such as Amazon) has BILLIONS in revenue but pays no taxes. Newsflash, Amazon makes zero profits, so they have nothing to pay taxes on. That's the way the company is run and you don't pay tax on revenue.

Another thing would be today a supermarket chain announced a £4.7 billion loss on the value of the property it holds. Someone says "wow, they are going to offset that against their taxes", with zero clue about how corporation taxes work, since you only pay tax on property when you dispose of it.

If people were informed about finance, there might be less outrage against some finance related headlines, and more outrage about things that don't make the headlines.