In a recent financial literacy test, the FINRA Investor Education Foundation gave 2 out of 3 respondents a fail. Uh oh, that’s not good news!
The test was taken by over 25,000 people and asked study participants five questions covering everyday finance topics. The questions covered aspects of economics and finance like inflation, savings accounts, mortgages, interest rates, compounding and diversification.
If these topics have you trembling in your boots, then fear no more! IBillionaire is here to help.
Having a fundamental level of financial knowledge is key to getting ahead in your personal finance game. Whether this is saving for retirement, for a major life item event or for a big-ticket item like a wedding or house, when you combine financial knowledge with smart decision-making you’ll be an investing whizz in no time. The final step is putting it all together and finding yourself an easy-to-use tool to manage and track your investments (Hint: check out the iBillionaire app for a straightforward, on-the-go investing solution!)
Individuals in this day-and-age need at least a fundamental level of financial knowledge. This knowledge, paired with savvy financial decision-making can best ensure an individual’s financial success.
So to help you on your way, iBillionaire has put together the following cheat sheet so you can ace your quiz and be a master of your everyday finances!
Inflation: This is a key term talked about in the economy and it’s essential you have a good grasp of the concepts. Inflation means that the general level of prices is going up so that more money will need to be paid for goods and services. Economists use inflation as a measure of an economy’s overall health, with an inflation rate of 2-3% characterizing a strong economy. [Read more]
Diversification: What is the one investing technique that all highly successful billionaires have in common? Yup, you guessed it. Diversification is a risk management technique that investors use to protect their assets, with the aim of limiting potential losses, by investing in a variety of companies and products. The rationale is that a diversified portfolio will be much less risky when compared to a portfolio consisting of just one investment type. Some of the common ways to diversify your portfolio are by investing in a number of different asset classes, sectors or geographies. [Read more]
Compounding: Often known as the best friend of an investor, compounding is the number one reason you should start investing as early as you can. The act of compounding allows you to reinvest earnings from an asset, to allow for interest on the initial investment and, in addition, to any previously accrued interest. It sounds complicated but it’s really a simple cycle to allow you to continually reinvest your savings and earnings, in somewhat of a snowball effect. [Read more]
Equipped with your new-found financial knowledge, why not give the test a go? -> try it here!
They say knowledge is power, so what are you waiting for? Take the front seat and get ready to ace your personal finances.
Get started with iBillionaire today.