Canadians might have to hit the books and brush up on their knowledge of investing.

The Bridgehouse Investor Knowledge Index shows that participants scored an average of 39% in a survey that measured Canadian investors’ understanding of investment terms and concepts.

Seventy-two percent of participants noted they would like to learn more about investing to help them manage their finances more effectively, and 93% want the education system to include lessons covering basic investing and financial principles.

Other highlights from the survey show the following:

  • While most Canadians were comfortable with the definition of bonds (70%) and equities (71%), few knew that different tax rates applied to different types of investment income: only 43% were aware that interest earnings were taxed at the highest rate, while just 24% knew that capital gains receive the most favourable tax treatment.
  • Most investors have a misconception about Canada’s relative size in global equity markets: 27% underestimate its size, 27% overestimate its size, and 23% have no idea what size it is.
  • Dollar-cost averaging is a concept that’s not familiar to most Canadians (63% got the definition wrong).
  • 62% of Canadians don’t know the difference between active and passive investing.
  • Eight years after the federal government lifted the foreign content restriction, 82% of Canadians still believe there are limits in their portfolios.

A version of the quiz is available on Bridgehouse’s website.

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Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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