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Financial Literacy - Financial tuneup
National poll results
Americans admit there's a lot to be confused about in investment matters.
Investment tuneup

Half of Americans say investing is confusing

Grable says the risk-tolerance difference between men and women is evident in their investment styles. "Men are more likely to embrace investments that have inherent volatility. A similar observation can be made in terms of income. Lower- to middle-income Americans appear to view volatility as loss rather than opportunity."

The data clearly illustrate that the lower- to middle-income respondents find investing difficult to understand.

"This confusion is leading some to avoid risky asset investing, which, in turn, helps explain lower levels of wealth accumulation for these households," says Grable. "In short, it is the lower- to middle-income segment of American society that is in the greatest need of financial planning and investment advice; however, the industry is simply not equipped to deal with this population of underserved people," he says.

Bankrate senior financial analyst Greg McBride points out the high confidence level of younger investors: 83 percent of 18- to 24-year-olds don't find investing confusing and 79 percent don't find it difficult to understand the different types of investments.

"Those kids, they think they know everything," he says.

Stumbling blocks
John Pallaria, CFP and adjunct professor in the CFP program at Boston University, says: "Once again we are looking at approximately 50 percent of people experiencing a hard time with all aspects of investing."

Which aspects of investing, if any, do you find difficult?

Here are some brief observations, broken down by category:

Diverse mix of investments for your age
"Studies have proven that the allocation of investments determines greater than 90 percent of investors' returns," says McBride. "I'm very skeptical that more than half of investors (53 percent) don't find this key concept to be difficult."

-- Posted: Oct. 22, 2007
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