One of the trends emerging during the COVID-19 epidemic is the growing number of new, young investors, driven by easy investment programs և developments, such as the ability to buy stock pieces. high-priced stock as opposed to an entire stock.

They have entered the investment market, but are they really ready?

Competition:

While programs can attract young people to the market, investing is not a game. But it is a kind of competition in which you use your knowledge and insight in the hope that your money will grow. To achieve the highest level of success, you need to understand the financial markets and invest as much as possible.

Lack of preparation or lack of key skills can lead to financial fiasco, which can lead to difficult lessons, especially at a young age. With that in mind, consider where a young investor can learn not only to invest but also to avoid fraud.

What better resource than fun games և quizzes created by regulators such as FINRA, the Financial Industry Regulator. FINRA regulates the brokerage industry.

Any resource I will discuss with you here may be of interest to young people. There is no textbook to read. There are no homework assignments. No ratings. Instead, there are easy, interactive resources that engage rather than bore … just have fun investing facts.

Investor Knowledge Quiz

I recommend starting with an interactive program that helps young investors gain a quick knowledge self-assessment. Called the Investor Knowledge Quiz, you can learn what you know about investing, և most importantly, what you do not know. FINRA “believes that all investors should have access to basic investment education information.” The quiz includes explanations for the correct answers.

Here is an example of a question.

You invest $ 500 to buy a $ 1,000 margin with a margin. The value of the shares decreases by 50%. You sell it. Approximately how much is left over from your initial $ 500 investment at the end?

$ 500

2. $ 250

3. $ 0:

4. I do not know / I am not sure

Answer. When you buy stocks with a margin, you run the risk of losing your entire investment or much more. In this example, the investor used $ 500 to buy $ 1,000 worth of stock, borrowing an additional $ 500 to make a purchase from the brokerage firm. When the stock was sold after a 50% drop in value, the remaining value was only $ 500 – the same amount that the investor still owed to the brokerage company for the margin loan. Read our Investor Alert to learn more about margin trading risks Investments by borrowed funds. There is no “margin” for the error.»

Learn to invest

Do me a favor after participating in the quiz. Take just a minute to learn about investing in Finra.org, which includes the Young Adults և Investments section. Look around you. There are a number of very short, targeted և interactive courses in the resources that you can generally try using the quick course link. Even people with short attention spans will benefit greatly. For example, “Is it worth keeping it?” ձեզ Assess the return on investment by guiding you through how it is calculated, which will help you compare the performance of one investment with another.

Risk calculator

Next, go to the FINRA Risk Calculator. There, in 12 questions, you will see whether you “share the characteristics և behaviors that have shown that some investors are vulnerable to investment fraud.” Everyone should have three to five minutes to test themselves. After passing the quick quiz, you will receive a report that will evaluate you depending on whether your personality and habits are subject to fraud. The report created by the risk calculator will inform you about yourself in a way that is useful and helpful.

Fraud calculator

If you are considering investing before you do, take a quiz (yes, only four) of these four questions called FINRA’s Scam Meter. To use a fraud calculator, you need to make some investment. Offer this to your family’s youngsters և try it for yourself. You can print out the results, which will give you an explanation for each of your answers.

Possibility

Con’s fun strategy game, called ‘Con’ Em If You Can ‘, was developed by FINRA Investor Education Foundation և Commonwealth, a national non-profit organization dedicated to strengthening the opportunities and security of the financially disadvantaged. The game is designed to help players learn to differentiate և to avoid investment fraud. You can find it here.

Knowledge gap

When it comes to investing, young investors who have no experience have a knowledge gap. There is a good reason. Learning to invest, even how to know what you do not know, requires many years of experience.

To assess the knowledge of investors, a recent study by the FINRA Education Foundation surveyed the world of investors and found that newcomers to the field have a lot to learn, which is enough to support the FINRA Foundation’s new efforts to address the knowledge gap. which seems to exist և helps prospective investors avoid making terrible mistakes.

Study of new investors

Earlier this year, the FINRA Foundation conducted a study with the University of Chicago-based research organization NORC entitled “Investing 2020: New Accounts – People Who Open Them”. The study classified new investors who “opened one or more non-pension investment accounts (s) in 2020 and did not have a taxable investment account until 2020.”

Among the findings were:

  • More than 60% of new investors were under the age of 45, and 22% of new investors were in the 18-29 age group.
  • When asked to rate their investment knowledge, 50% of new investors rated themselves as average and 38% as low or very low.
  • New investors answered correctly on average Only 1.4 out of 5 questions Investors’ knowledge test.

New FINRA initiative

The results of that research, as well as the FINRA Foundation 2019. The survey, which found that investor awareness in the United States was low among all investors, provided statistical support for FINRA’s new multi-annual, $ 30 million multilateral initiative. FINRA President տնօրեն Executive Director, as well as FINRA Foundation President Robert Cook said in a statement:

Two stages

The first phase of the project, which runs until August 30, 2021, involves the public. FINRA seeks comment on 10 issues that involve educational efforts. If you are interested in commenting, take a look at the questions here, where you will find instructions for submitting your comments. You can also read the comments already submitted.

The second phase will be a comprehensive program “aimed at educating this segment of these fast-growing retailers who are making technological advances to enter the US stock market.”

Congratulations to FINRA on taking on this important project. All investors will benefit.

Questions:

If you have any questions about investing, please email me forbes@juliejason.com:, Include your city and state և Mention that you are a Forbes.com reader. Although not all questions can be answered, every letter is read and reviewed. Definitely to follow the topics I covered follow me on forbes.com.

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