Coalition Battles Investment ‘Literacy Crisis’
A coalition of government agencies, industry associations and consumer groups announced a week of seminars to teach Americans basic financial information that a new report says they sorely lack.
“More people spend time shopping for paper towels than they do considering various investment alternatives,” said Securities and Exchange Commission Chairman Arthur Levitt. “We are in the midst of a financial literacy crisis, and many will pay a high price for their lack of financial knowledge.”
The investor education campaign, from March 29 to April 4, will use town meetings, publications and media programs to show Americans how to save and invest their money and to teach investors how to protect themselves from manipulative brokers and fraudulent stock scams.
Sponsors of the program--which include the SEC, the Securities Industry Assn., the Consumer Federation of America and the American Assn. of Retired Persons--said they worry because Americans are increasingly responsible for their own financial security, yet they lack investment knowledge.
While 63% of Americans know the difference between a football halfback and a quarterback, Levitt said, only 14% can tell the difference between an income stock and a growth stock. An income stock refers to shares in a stable company that historically pays consistent dividends to shareholders, and growth stocks are riskier investments in companies thought to have the potential for long-term growth.
“Americans today have more of their money in the stock market than ever before, but tens of millions lack the basic saving and investing information they need to invest wisely and gain financial security,” Levitt said at a Washington news conference to announce the campaign.
The share of household assets invested in stocks rose on average last year to 28% from 12% in 1990, according to an SEC report released Tuesday that summarizes recent studies about the impact of financial illiteracy. Additionally, last year stocks represented 43% of financial assets including bank accounts, mutual funds and securities, the SEC report said.
The national events in the campaign will include the kickoff of a $1-million “Financial Literacy 2001” program to teach investment fundamentals to every high school senior and a national investors’ town meeting to be broadcast from Washington on April 4.
Securities regulators from 21 countries in North, Central and South America and the Caribbean also will offer investor education programs in their countries during the week, the SEC said.
