The average consumer answered just 4 out of 10 questions correctly on a recent investing quiz from MagnifyMoney that asked 1,025 American adults about topics from dividends to the meaning of a price-to-earnings ratio.
Younger generations performed more poorly on the quiz compared to older generations, with both millennials and Gen Z averaging scores under 40%. Investing knowledge can be particularly beneficial for younger adults: They can take greater advantage of compound interest, which Albert Einstein supposedly called "the most powerful force in the universe" because of the way it can help your money grow over time.
Of those surveyed, only 30% knew what compound interest is and how it's calculated.
We recreated MagnifyMoney's quiz so you can see how much you know about basic investing concepts, and where you may need to fill in some gaps. If you don't know all the answers, don't fret. We'll give you resources to help you learn. And if you have a money question you'd like for us to address, email us at firstname.lastname@example.org, so that we can answer it in a future article.
This quiz has been updated to clarify the answer on the question about P/E ratios.
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