Income Doesn’t Necessarily Dictate Investing Knowledge

A poll of 2,001 U.S. residents found that while people’s confidence in investing differed based on their household income, many shared similar knowledge gaps regardless of their earnings, according to an article on Talker.

Eighty-two percent of those with an annual income greater than $150,000 expressed high confidence in their investing knowledge, compared to only 34% of those making less than $30,000. The high-income respondents were also much more likely to express confidence in making investment decisions than the lowest-income respondents (76% vs. 31%).

However, Talker reports that eight in 10 of all respondents drew a blank when asked to explain what a “bond” is. And while nearly six in 10 claimed to be familiar with the concept of “hedge funds,” seven in 10 couldn’t match it with the corresponding definition.

Commissioned by CARL and conducted by OnePoll, the survey also found that one-third of current non-investors don’t believe they have enough money to start. More than half think they need to earn at least $60,000 a year to begin investing in non-traditional assets such as hedge funds.

The article says this might be the reason 57% of people earning less than $60,000 have never invested, compared to only 18% of those making at least $90,000.

The survey also found that on average, respondents think 22% of their income should go toward investing.