Financial literacy remains low in Canada, with 40% of people surveyed failing a general investment knowledge test, according to the Canadian Securities Administrators.
Despite these shortcomings, 57% of those surveyed by the CSA said they are confident when it comes to making investment decisions. When asked what they think the annual rate of return is on the average investment portfolio, however, only 12% gave a realistic estimate.
Our research shows that Canadians continue to be approached with fraudulent investments and aren’t reporting it“Understanding key investment concepts, such as the relationship between risk and return, can help investors make suitable investment decisions,” said Bill Rice, chair of the CSA, the umbrella group for the country’s provincial and territorial securities regulators.
The survey also revealed that almost 30% of Canadians believe they have been approached with an investment fraud at some point in their lives, though less than a third of them reported the incident to authorities.
“Our research shows that Canadians continue to be approached with fraudulent investments and aren’t reporting it,” said Mr. Rice. “As securities regulators, enforcement is always a top priority for us, and to help us investigate investment fraud, we need to hear from those who have been affected.”
Regulators have attempted to improve mechanisms for reporting incidents of suspected wrongdoing, but some investors complain that the process remains complex and slow.
The CSA’s investor index survey, which followed similar surveys in 2006 and 2009, revealed that social media is emerging as an investment tool but traditional channels still dominate. More than one-third of those surveyed said they have used at least one social media platform as a source of information about investing.
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