No perfect scores on this financial quiz

Canadians have some studying to do when it comes to financial literacy, show the results of the Bridgehouse investor knowledge index.

The survey quizzed investors’ understanding of terms and concepts, such as the definitions of bonds, equities and dollar-cost averaging, as well as the difference between active and passive management.

Participants scored an average of 39%, or 6 out of 15 questions.

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But 72% of participants noted they would like to learn more about investing to help them manage their finances more effectively—and 93% want the education system to include lessons covering basic investing and financial principles.

Survey highlights:

While most Canadians know the definition of bonds (70%) and equities (71%), few know different tax rates apply to different types of investment income: 43% were aware that interest earnings were taxed at the highest rate, while 24% knew that capital gains receive the most favourable tax treatment.
Most investors don’t know Canada’s relative size in global equity markets: 27% underestimate its size, 27% overestimate its size and 23% have no idea what size it is.
63% got the definition of dollar cost averaging wrong.
More than 62% of Canadians don’t know the difference between active and passive investing.
82% of Canadians still believe there are limits imposed on their registered portfolios.

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The company also noted that of the 1,004 respondents, no one got a perfect score on the 15-question survey.

A version of the survey is now available as a multiple-choice quiz here.

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