Who is Financially Competent?

WHO IS «FINANCIALLY COMPETENT»? TEST YOURSELF! The ING international survey on financial competence tested people on their understanding of the interest rates, mortgages, inflation and more. Suppose you had €100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if the money was left to grow? 4. A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less. A - True B - False A - around €102 B - around €105 C- around €110 If interest rates rise, what will typically happen to bond prices? 3 A - They will rise B - They will fall C- They will stay the same Imagine the interest rate on your savings account was 1% and inflation was 2% per year, After one year, how much would you be able to buy with the money in this account? For the same amount of money, a person can enter one of the following lotteries. Lottery A pays a prize of $200 and the chance of winning is 5%. Lottery B pays a prize of $90,000 and the chance In either case, if one does not win, one does not get any money. Which lottery pays the higher average amount? 000 winning is 0.01%. A - More than today B - Exactly the same as today C- Less than today A - Lottery A B - Lottery B C- The two lotteries pay the same average amount Look answers on the bottom 11 11 IN SURVEY THOUSANDS EUROPE TOOK PART PEOPLE COUNTRIES NUMBER OF CORRECT QUESTIONS (2 4 AGE Over 25 WORK Full time Have some «financial education», such as school, university or studying online resources or from books. EDUCATION 54% 70% have education have education SPENDING MONEY IN FAMILY Not argue with their life partner about money. But some do still have disagreements over money - such as if one half goes on a spending spree, annoying the other. FINANCIAL DECISIONS Make their own financial decisions. Instead of relying on others to make choices for them. CARE OF FINANCIAL ISSUES Manage their money very carefully – going through bank statements, credit card bills and other documents thoroughly every month. 71% 69% 67% 63% 58% 57% The percentage who manage their money very carefully SPENDING TIME 18% admit to spending longer shopping for clothes than looking for a good savings account. It does not correlate with the financial competence It might come as a surprise but those who scored well were not necessarily happier with their lives. HAPPINESS Answers: C, C, B, A, A HOLBORN Source: ING International Survey on Financial Competence www.ezonomics.com/iis_financial_competence ASSETS LIMITED