3 Things 3-13

Thing One

A Quick Financial Literacy Quiz Below is a three question financial literacy quiz. Have a go at it and then see the answers at the end. 1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? A. More than $102 B. Exactly $102 C. Less than $102 2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? A. More than today B. Exactly the same C. Less than today 3. Please tell me whether this statement is true or false: “Buying a single company’s stock usually provides a safer return than a stock mutual fund.” ♦ True ♦ False Before I show you the answers, I'd like to point out a few facts about the quiz that were uncovered in a study done by Olivia S. Mitchell of the University of Pennsylvania’s Wharton School and Annamaria Lusardi of the George Washington University School of Business:

• In a survey of Americans over the age of 50, only half could answer the first two of the above questions correctly. Only one-third got all three right.

• Forty-four percent of Americans with a college degree answered all three questions correctly. The figure was 31% for people with some college and 64% for Americans with postgraduate education.

• “Even well-educated people are not necessarily savvy about money,” the professors write.

• In the U.S. and other countries, men are much more likely to get all three correct answers. The figure is 38% for men vs. 23% for women in this country.

• Another striking finding, also consistent across countries, is that men are more confident about their financial knowledge than they should be: even when they were wrong, they reported being ‘very confident’ about their answers. In contrast, women generally answer fewer of the financial knowledge questions correctly, on average, but they are more likely to admit when they do not know how to answer our questions.

Here are the answers: 1. A 2. C 3. False So, how did you do? Too easy? Good.

Thing Two In The Oddest Of Places The following is from the archives. Re-reading it recently brought us such a flash of insight that we thought we'd share. We hope you enjoy. "I attended my niece's graduation from high school today. I can hardly believe it. It doesn't seem like that long ago that I watched her mother and grandmother put her in a backward facing car seat. Today, Jada drove her mother and grandmother to the graduation ceremony. Most ceremonies follow a familiar script. This one was no different. It went something like this: Opening Scene: The graduates marched in to "Pomp and Circumstance", the traditional graduation theme song. Rising Action: A few students addressed the audience, followed by the Valedictory speech. Climax: School officials took turns reading off the list of graduating seniors one by one. Falling Action/Resolution: The graduates marched out again to "Pomp and Circumstance". I should stipulate that while it followed the script, the ceremony wasn't as painful as it might sound. I actually couldn't have been more impressed with all of the student speakers. But I will admit, I was dreading the name call out portion of the program. Why? Because there were 412 graduates! The ceremony was held in a very large church. We sat in the last row and occupied the four spots closest to the aisle (and a door). I had every intention of making my escape once her name was called, but my wife was having none of it. So I sat and watched and listened as parents and friends exploded in excitement, blurting out nicknames and cheers as their loved ones' names were called. But in all my watching I also noticed a man, sitting in the same spot, one row in front of me. I started paying attention to him. I'm not sure why. Then a name got called, and I noticed him give just the slightest fist pump. It wasn't a gesture done for the entertainment of the crowd, like so many others, and it obviously wasn't meant for the graduate to see. It was just for him it seemed. I figured he was related to the kid whose name was just called in some way. I don't recall the first name, but I'm pretty sure the last name was Foster. Then, a few names later, another subtle fist pump, then another, and after a few more names another. It went on like that until the entire roster had been read aloud. I was intrigued. So during the recessional, with "Pomp and Circumstance" once again playing in the background, I tapped him on the shoulder and asked him how he knew so many of the kids. He said, "Oh, I'm a math teacher here. I teach real world mathematics, which includes things like personal finance". It all made sense. Then he added, "I counted one hundred and fifty kids that I've taught up there today!" The sense of pride was evident in his broad smile and, in hindsight, in the very subtle yet emphatic celebratory gesture he performed with each familiar name called. He made such an impression on me that I asked for his phone number and gave him mine with the idea that a future collaboration would be both fun and beneficial. I also concluded (once again) that there are lots of good teachers out there and that educators are probably not the biggest problem with education. That thought lead to my recollection of the following quote by the famous statistician and quality guru, W. Edwards Deming: "A bad system will beat a good person every time" .................... In our role as a holistic financial services provider, we're just like that math teacher - quietly, but actively rooting for you and totally invested in your success. Please know that and please pass it on.

Thing Three Just A Thought "Most of us end up with no more than five or six people who remember us. Teachers have thousands of people who remember them for the rest of their lives." - Andy Rooney