Who doesn’t love a good quiz? For instance, in honor of this coming Sunday’s Academy Awards, let us posit this: which of these all-time greats, in their long careers filled with memorable roles, achieved the most Oscar nominations: Myrna Loy, Edward G. Robinson, Mia Farrow, Donald Sutherland or Fred MacMurray?
Ah, you knew it was a trick question—the answer, of course, is that none of these iconic performers achieved a single competitive Oscar nomination. Not one.
On the other hand, Peter O’Toole had an astonishing 8 nominations, and Richard Burton 7—without a single competitive win between them. Remember that if your favorite gets shut out on Sunday.
And if you’re wondering who has the most acting nominations in Oscar history, it’s Meryl Streep with 18 (3 wins).
Turning from movies to money—yours—we ask whether most Americans are financially literate? Alas, the answer seems to be no, and compounding the problem (bad joke, sorry) is the likelihood that less knowledge usually translates into lesser returns in portfolio accounts. The issue is considered in Emily Brandon’s first-rate usnews.com article headlined 3 Questions That Predict Your Financial Future. She writes:
“Workers increasingly need to make important retirement planning decisions, including how much to contribute to retirement accounts, how to invest their savings and how to draw down their wealth in retirement. A new report by the Pension Research Council at the University of Pennsylvania’s Wharton School found that adults in many countries make these decisions with surprisingly little financial knowledge, and that those with greater financial literacy tend to make smarter retirement investment choices.
“The researchers asked people in 18 countries three simple financial literacy questions about interest rates, inflation and investing. ‘Answering just one additional financial question correctly is associated with a 3 to 4 percentage point greater probability of planning for retirement, in Germany, the United States, Japan and Sweden’, according to the report. ‘Financially literate individuals do plan better, save more, earn more on their investments and manage their money better in retirement’.
“Here are the three financial literacy questions:
- Suppose you had $100 in a savings account and the interest rate was 2 percent 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
b. Exactly $102
c. Less than $102
- Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year. After 1 year, how much would you be able to buy with the money in this account?
- 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.”
“These questions explore basic saving and investing concepts that everyone saving for retirement needs to know. Savers should be able to calculate how their money will grow over time and what inflation will mean for their spending power in retirement. And it’s useful for investors in the stock market to know simple ways to reduce risk in their portfolio, especially as they approach retirement.
“When Americans over 50 were asked these three questions, only half could answer the first two questions about compound interest and inflation correctly, and just a third knew how to answer all three questions.
“Unsurprisingly, more educated people perform better on this quiz, but people of all education levels get shockingly low scores. Less than half (44 percent) of U.S. college graduates were able to correctly answer all three questions, which dropped to 31 percent of people will some college education and just 19 percent of high school graduates. “Even well-educated people are not necessarily savvy about money,” according to the report. Among people with post-graduate degrees, 64 percent were able to answer all three questions correctly.
“Men (38 percent) were more likely than women (23 percent) to know the answer to all three of the financial literacy questions. Men also said they felt more confident about their financial knowledge, even when they answered incorrectly. “Women were more likely to admit that they did not know the answer to the question.
“Answers: 1. a, 2. c, 3. B.”