Canadian money, twoonies, coins, calculator on desk

Investors with greater financial knowledge are more likely to plan ahead, suffer less stress about their finances, and feel more in control of their financial futures, according to a new study released Wednesday by the Ontario Securities Commission’s (OSC) Investor Office.

The study, which was published as part of the OSC’s activities for Financial Literacy Month, points to the numerous benefits of investor education.

The study categorized 42% of respondents as “high knowledge,” based on their responses to three standardized questions covering basic concepts of simple compound interest, real compound interest and investment risk. Respondents who got all three questions correct were classified as having “high” investment knowledge.

Overall, the survey found that older, higher-income investors were more likely to be categorized as high knowledge. The 52% of respondents that use advisors were also considered high knowledge.

The benefits of investor knowledge were revealed in the survey, which found that more knowledgeable investors are more likely to plan ahead, feel more in control of their finances and report lower stress about finances.

Younger investors, particularly young women (aged 18 to 34) and those in the lowest income category (under $60,000 in annual income), are among the least knowledgeable, and the most likely to say that they haven’t started saving for retirement.

These younger, less-informed investors also report being more likely to turn to online sources of investing information. Conversely, older, wealthier investors are more apt to seek out traditional sources, such as the financial industry.

This lack of knowledge and planning among younger investors may also be feeding their expectations about their future. For example, the survey found that younger investors are much more likely to expect their standard of living in retirement to represent an improvement, with 39% of those aged 18-34 expecting an upgrade in their standard of living when they retire (compared to their current situation). In contrast, just 8% of those who are actually on the precipice of retirement (those aged 55 and up) expect their living standards to improve once they retire.

The study also found that most respondents have not talked to their parents about how they would want their finances managed if they were unable to do it for themselves, but 42% of those with parents who are older than 85 are now managing their parents’ finances.

The study examined a number of other topics including investors’ exposure to the U.S. markets and their views on the emerging cannabis sector. Just 7% of respondents are currently investing in the cannabis sector, it found, although 23% said that they would consider doing so.

The OSC’s research was conducted by Innovative Research Group and involved an online survey of 2,259 Canadians, aged 18 and older, between Oct. 11 and 22.

The survey findings are available online at