Northwestern Mutual Life Insurance is out with a study that would have us believe that Minnesotans are illiterate when it comes to financial knowledge.
Sure. Can we see a show of hands from folks who know how Index funds work and whether bond investments are the best protection against inflation?[jump]
If you feel bad, at least take comfort that you're in the same boat as about 69 percent of the 1,664 Americans who took the company's financial IQ test -- and that most of us haven't smartened up since the company's last survey in 2006.
In Minnesota this year:
- 36 percent know the average rate of inflation is closer to 3 percent than 6 or 9 percent.
- 51 percent incorrectly believe that bonds offer the best protection against inflation.
- 33 percent knew that Index funds seek to match the returns of stock or bond benchmarks.
- 35 percent admit they have no knowledge of how Index funds work.
It's hard to know whether we should trust the findings though. After all, the questions appeared on the Internet, and according to Northwestern Mutual, only 35 percent of Minnesotans believe the Internet is a reliable source of information on pretty much anything, let alone the unpredictability of the bond market.