Americans don’t understand these basic financial terms

Americans don’t understand these basic financial terms

Millennials may be flocking to bitcoin rather than investing in more traditional assets, but most Americans might want to take a class in the cryptocurrency.

“Bitcoin” BTCUSD, +4.30% was the financial term that Americans were least likely to say they understood, according to a survey of more than 1,000 people from training company and polling firm YouGov. A 52% majority of those surveyed said they were not confident about the meaning of the term “bitcoin,” a digital currency that can be bought and sold on a public ledger called the blockchain and operates without a central bank.

People’s curiosity about bitcoin does appear to rise and fall with its price. Searches for “What is bitcoin” on Google GOOG, -0.56% peaked as the price was hitting a high near the end of 2017.

More concerning though is the fact that many Americans said they weren’t confident about more common financial terms such as “index fund” (49%), a mutual or exchange-traded fund that tracks a specific set of underlying investments, “stock options” (43%), a company benefit that allows employees to buy shares in a company at a certain price, and “Roth IRAs” (39%), retirement accounts that generally offer tax-free distributions.

Still, there are some finance basics that Americans have a strong grasp on, including “savings accounts” (88%), “401(k) accounts” (70%), “fixed-rate mortgages” (67%) and “stocks” (65%).

A lack of knowledge of basic financial terms will impact people’s ability to make competent decisions around savings, investments and property management, Joseph Scott, a spokesman for, wrote in the report.

The report’s findings echoed other research suggesting Americans need to brush up their financial know-how. A recent study from financial research firm Raddon found that while 44% of people self-report being extremely or very financially literate, only 6% scored an A grade of 90% or better when they took a financial quiz.

On the plus side: A recent poll from Wells Fargo WFC, -0.91% and Gallup found that only 2% of investors said they own bitcoin, so it’s probably not surprising that most Americans don’t understand what it is.

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