To test the general public's financial literacy, the American Bankers Association (ABA) Foundation posed these five questions:
Q. What is considered a good credit score?
A. Credit scores can range from 300 to 850. Generally, anything over 700 is a good score. Your score factors in your payment history, types of credit, and outstanding debt.
Q. If you must borrow $200, would you rather pay back $205 or $200 plus 5% interest?
A. $205 is better because $200 plus 5% interest comes out to $210.
Q. You have $1,000 in a savings account earning 2% interest a year. After two years, how much would you have?
A. The savings would grow to $1,040.40 by the end of the second year because of compounding interest.
Q. If you're investing, is it safer to put your money into a single holding or multiple assets?
A. It's safer to put money into multiple assets. Through diversification, your risk of losing money decreases when money is spread across multiple investments (although there are no guarantees).
Q. Over the next 15 years, the cost of living and your income both double. Will you be able to buy more, the same or less than today?
A. The same. Inflation drives up costs, but buying power stays the same when inflation and income rise at the same rate.
How did you do on this quiz? You may need more guidance than you thought.
© 2020 Advisor Products Inc. All Rights Reserved.
As your financial partner, our mission is to improve the lives of our clients and their families by providing objective financial advice and exceptional service. Let us show you how.
Schedule an Appointment
Stocks Dropped Last Week But Data Confirmed Economic Recovery
(Friday, September 18, 2020, 8:30 PM EST) Stocks dropped 1.1% today and closed slightly lower
Read more >>
2020 Year End Tax Planning For Retirees, Business Owners, And Families
(Tuesday, Sept. 22, 2020; 10:30 PM EST) Covid has suddenly imposed tax and financial obstacles
Year End Tax Tips For Business Owners And Family Wealth
Seamount Financial Group, Inc. is a Registered Investment Adviser with the U.S. Securities and Exchange Commission. However such registration is not an endorsement by the Commission.
Investment advisory services offered through Seamount Financial Group, Inc.