Report reveals the financial terms that people struggle with the most
Many of the terms that are a daily part of the wealth professional vocabulary are unfamiliar or poorly understood by most Canadians.
While advisors will have no problem with words such as annuity, yield, and correlation, the average person is likely to struggle with these investment and financial terms and admit that they have knowledge gaps that they are trying to plug.
A new BrokerChooser analysis of financial related searches for definitions of common terms reveals that an average of more than 20,000 Canadian searches are made each month for words such as broker, dividend, and hedge fund. The difference between a bear market and a bull market also feature in the rankings, along with fixed income and hedge funds.
But the top 10 searches is led by ETFs. More than 11,400 searches are made in an average month by Canadians wanting to find out more about these investment funds. The searches include the acronym and the full term exchange-traded funds.
Perhaps surprisingly, equity is the second most searched with around 10,600 average monthly searches. But Adam Nasli, head analyst from BrokerChooser says there are reasons why this term may be confusing.
"While it’s a fundamental financial concept, equity is often misunderstood due to its broad usage across different contexts” such as equity a homeowner may have in their property, the difference between a company’s assets and liabilities, and of course stocks and shares.
Canadians are also keen to understand the economy, with GDP taking third place in the rankings of financial terms they find most confusing.
The top ten detailed in the report are:
|
Rank |
Finance term |
Average monthly searches for definition (Canada) |
Average monthly searches for definition (Worldwide) |
|
1 |
ETF (Exchange Traded Funds) |
11,400 |
142,230 |
|
2 |
Equity |
10,600 |
247,100 |
|
3 |
GDP (Gross Domestic Product) |
7,700 |
176,800 |
|
4 |
APR (Annual Percentage Rate) |
5,950 |
107,590 |
|
5 |
Yield |
4,150 |
88,250 |
|
6 |
Annuity |
3,750 |
77,550 |
|
7 |
Correlation |
3,100 |
71,700 |
|
8 |
Arrears |
2,900 |
83,260 |
|
9 |
Principal |
1,500 |
76,750 |
|
10 |
Capital |
1,400 |
81,700 |
“Financial literacy is no longer just a nice-to-have skill—it’s essential. With AI now in the hands of fraudsters, financial scams are becoming more sophisticated and harder to detect. People need to be better equipped not only to manage their money wisely but also to protect themselves from misleading offers and deceptive financial products,” concluded Nasli.
