MoneyTrack/IPT Investing Secrets Survey

MoneyTrack and IPT released the results of the national “Investing Secrets Survey” on May 10, 2007. The survey, conducted by Opinion Research Corporation, revealed what U.S. investors know about eight basic principles and practices of sound investing: (1) how compound interest works; (2) the meaning of diversification; (3) having a comprehensive financial plan; (4) avoiding over-reliance on Social Security in retirement; (5) understanding that a sudden windfall (e.g., an inheritance, insurance settlement or winning the lottery) is not the surest path for a young person building a retirement nest egg; (6) understanding that stocks deliver the better returns over time than such alternatives as savings accounts and certificates of deposit (CDs); (7) how to avoid investment scams; and (8) checking out financial planners and brokers before entrusting your money to them.

Selected survey highlights:

  • Over a third of investors (35 percent) incorrectly “think a 25-year-old American is MOST likely to come up with a half-million dollar or one-million dollar nest egg for retirement” via an inheritance (21 percent), winning the lottery (10 percent) or a major insurance settlement (4 percent).
  • More than two out five investors (43 percent) say that they would be likely to invest in at least one of three investment schemes presented as typical “can’t lose” investment swindles. Two of the three are actual swindles; all three exhibit hallmarks of scams: “can’t lose” or “no risk”.
  • Only a third of investors who use or have used a financial planner or stockbroker checked out the background of that person (or persons) with state, federal or industry regulators or self-regulators.