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Investor Psychology Quiz

Take this quiz to better understand investor psychology and avoid some of the most common mistakes that beginners make.

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What is financial literacy and self-efficacy, and how are they related?

If one believes that investing is impossibly difficult, they will surely succeed. True or False?

Does financial literacy create confidence? Does confidence create financial literacy? Is there a clear relationship?

What does it mean to tune out the market noise?

An individual believes that a particular company’s stock is about to succeed. This causes them to sell all their shares of VOO (S&P 500 index fund), making over half of their portfolio in the single company. Is this a psychological fallacy? If so, which?

An individual checks their portfolio daily, often in distraction from important tasks. As money is incredibly important, surely this is the right thing to do? If not, what is this behavior known as?

An individual believes that–as stocks crashed exactly 5 years ago–they are bound to crash again. This causes them to sell all of their assets in anticipation. Is this a favorable decision? Why could this be successful or detrimental?

An individual works for Google. After attending a meeting, they believe that the company has the ability to succeed within the next 24 hours. They immediately sell all of their assets, putting forth all into Google stock. The next day, the stock crashes due to an unexpected statistic released by Google. The individual panic-sells, and they lose 5% of their portfolio. What type of psychological bias does this exemplify?

What is the ultimate goal of financial media outlets?

Why is the compounding effect essential for successful investing? What is a key characteristic of the compounding effect?