Surveys indicating that investors lack the knowledge to make sound decisions regarding their investments have the support of the Utah Department of Commerce.
The department's Division of Securities released the results of a national survey suggesting that Utah investors, along with their counterparts across the country, need to learn basic investing skills, develop a financial plan and start checking out professionals.Mark Griffin, division director, said, "We have learned that only one of five investors can considered to be `financially literate.' Very few have financial plans in place and even fewer take the time to check out their financial professional."
The division joined Investor Protection Trust, Arlington, Va., in releasing these results of the survey:
- 18 percent of investors responding to the survey are knowledgeable about financial matters. Twenty-five percent of the male respondents know what they are doing in investing, but only 11 percent of the women knew.
- Older investors know more about investing than younger people.
- 62 percent of investors mistakenly believe that a "no-load" mutual fund involves no sales charges or other fees.
- About half understood the purpose of diversification is to reduce risk.
- Only 39 percent knew that when interest rates go up the prices of bonds usually decline.
- Two thirds haven't prepared a specific investment plan either on their own or with the help of a financial professional.
- 88 percent have never looked into the disciplinary background of their broker or financial planner.