Every month is a good month to beef up your financial literacy. But there is a special focus on it this month, since October is National Retirement Security Month. One of its primary goals, according to the U.S. Senate resolution designating the month, is “increasing the…personal financial literacy of all people in the United States.”
Levels of financial literacy have been dismally low for years, of course, so this need is hardly new. Yet our collective financial literacy appears to be facing a new and very modern threat: The internet. According to research posted this summer on the Social Science Research Network (SSRN), the internet leads investors to think they know more than they really do, and the resulting overconfidence in turn causes their portfolios to perform less well. I first heard about this fascinating research from the always-insightful Joachim Klement, a trustee of the CFA Institute Research Foundation and former head of equity strategy for UBS Wealth Management. The SSRN study, entitled “Confidence Without Competence: Online Financial Search and Consumer Financial Decision-Making,” was conducted by Adrian Ward, a marketing professor at the University of Texas at Austin; Tito Grillo, a professor of marketing, business economics and law at the University of Alberta, and Philip Fernbac …