Today, we close off financial literacy month with the results from the test some of our readers took a few weeks ago. We appreciate everyone taking the time to do the test.
The financial literacy rate of our readers is 80%! I’m thoroughly impressed and pleasantly surprised. The question that some of our respondents struggled with was the last question which tests your understanding of diversification.
3) “Do you think the following statement is true or false?
Buying a single company share usually provides a safer return than an equity unit trust fund.”
C) Don’t know
E) Refuse to answer
The respondents who got this answer incorrect thought that a single company share provided safer returns compared to a unit trust fund. Interestingly, we find this to be the case with some of the clients we’ve worked with in the past. There does seem to be some confusion regarding unit trusts and the diversification benefits they provide. It is clear that we, the financial advisors, need to do more work around this topic to educate our clients.