Online investing is a financial downfall for the majority of Americans, according to an article by InvestingNerd.
The problem for Americans comes not because of investing, but lack of knowledge. Of those researched, 81.4 percent didn’t know what type of account to open in order to trade stock online, which is a brokerage account.
Current online investors also said that low prices and fees were the most important factor to them in choosing a broker. When it comes to following their own advice, however, only one in 10 investors actually compared costs.
Investors pay too much for trade execution without realizing it. Most investors could receive the same quality execution at a fraction of the cost if they use a discount brokerage.
Along with investment illiteracy, financial illiteracy is an epidemic that is growing in America, according to the study. It includes lack of understanding in financial planning, debt, credit, mortgage and budgeting. The study found a close connection between financial and investment literacy.