Boost Your Investment Confidence: A Simple Guide to Financial Empowerment

Investing can feel overwhelming, especially if you're unsure about your financial knowledge and decision-making skills. Building confidence in managing investments is crucial for long-term financial success. Making informed decisions, handling market changes, and setting clear financial goals can greatly impact your investment outcomes.

A recent study revealed that over half of Americans feel "financially frozen," overwhelmed, or unsure about their financial decisions. Source: NY Post

To help you assess your investment confidence, we've developed an Investment Confidence Tool. This tool provides insights into your strengths and areas for improvement, guiding you toward better financial literacy and decision-making.

The Investment Confidence Assessment

Our Investment Confidence assessment consists of ten carefully designed questions that measure your comfort in key financial areas. Each question is scored based on your level of confidence or familiarity with various financial concepts.

The Questions

How confident are you in making investment decisions? 

1 - Not at All
2 - Slightly Confident
3 - Moderately Confident
4 - Fairly Confident
5 - Very Confident

How familiar are you with diversifying a portfolio? 

1 - Not Familiar at All
2 - Slightly Familiar
3 - Moderately Familiar
4 - Fairly Familiar
5 - Very Familiar

Do you feel prepared to handle market fluctuations? 

1 - Not Prepared at All
2 - Slightly Prepared
3 - Moderately Prepared
4 - Fairly Prepared
5 - Very Prepared

How confident are you in setting and sticking to a financial plan? 

1 - Not Comfortable at All
2 - Slightly Comfortable
3 - Moderately Comfortable
4 - Fairly Comfortable
5 - Very Comfortable

How confident are you in managing your monthly budget and expenses? 

1 - Not at All
2 - Slightly
3 - Moderately
4 - Fairly Well
5 - Very Well

Are you confident in identifying and prioritizing financial goals? 

1 - Not Confident at All
2 - Slightly Confident
3 - Moderately Confident
4 - Fairly Confident
5 - Very Confident

Are you comfortable discussing financial goals with family members or partners? 

1 - Not Comfortable at All
2 - Slightly Comfortable
3 - Moderately Comfortable
4 - Fairly Comfortable
5 - Very Comfortable

Do you have a clear understanding of your current financial position? 

1 - Not at All
2 - Slightly
3 - Moderately
4 - Fairly Well
5 - Very Well

How comfortable are you with digital financial tools and platforms? 

1 - Not Comfortable at All
2 - Slightly Comfortable
3 - Moderately Comfortable
4 - Fairly Comfortable
5 - Very Comfortable

Do you understand the risk-return tradeoff in investments? 

1 - Not at All
2 - Slightly
3 - Moderately
4 - Fairly Well
5 - Fully Understand

Each question includes five answer options that reflect different levels of confidence, ranging from "Not at All" to "Very Confident." These responses are assigned scores from 1 to 5, with higher scores indicating greater confidence and understanding.

Scoring and Confidence Levels

Your total score from the assessment determines your overall investment confidence level. This score helps you identify where you stand and what steps you may need to take to strengthen your financial knowledge.

Confidence Thresholds

Low Confidence (Score ≤ 20)
You may benefit from focused financial education and mentorship to build core investment skills. Consider enrolling in financial literacy courses or working with a financial coach or advisor for personalized guidance. This can help you develop a stronger understanding of investment and financial planning principles.

Moderate Confidence (Score 21–40)
You’ve built a solid foundation, but there’s still room to grow. Strengthening specific skills through continued learning, hands-on experience, or personalized support from a financial advisor can help boost your confidence and decision-making in investing.

High Confidence (Score 41–50)
You have a strong grasp of financial concepts and appear well-equipped to make informed, independent decisions. To stay sharp, consider continuing your education on evolving planning and investment strategies. Even with high confidence, a check-in with a financial advisor can help ensure your plan is dialed in and aligned with your long-term goals.

Regardless of where you fall on the confidence scale, it's important to remember that many people share similar feelings about investing. Uncertainty about financial decisions is common, especially with the vast amount of information available. Most investors, even experienced ones, continue learning and refining their strategies over time. Building confidence is a process, and small, consistent steps can make a big difference in your financial journey.

Why Investment Confidence Matters

Confidence in investing is not just about knowledge—it's about taking action with clarity and assurance. Those with higher investment confidence are more likely to set financial goals, make strategic investment decisions, and navigate market fluctuations effectively. By understanding where you stand and taking steps to improve, you can develop a more secure and prosperous financial future.

A study found that people with higher confidence in themselves and the economy tend to be more willing to invest in growth oriented assets like stocks. Source: ISR Michigan

Frequently Asked Questions (FAQs)

What is investment confidence? Investment confidence refers to your belief in your ability to make sound investment decisions. It encompasses understanding financial concepts, assessing risks, and feeling assured in managing your investments.

How can I improve my investment confidence? Improving investment confidence involves increasing your financial literacy through education, seeking guidance from financial advisors, and gaining practical experience in investing. Starting with small investments and gradually expanding as you learn can also help build confidence.

Why is diversification important in investing? Diversification involves spreading your investments across various asset classes to reduce risk. By not putting all your money into one type of investment, you can mitigate potential losses and achieve more stable returns over time.

What is the risk-return tradeoff? The risk-return tradeoff is the principle that potential returns on investment rise with an increase in risk. Lower-risk investments typically offer lower returns, while higher-risk investments may provide higher returns, but with a greater chance of loss.

Need Help Improving Your Investment Confidence?

If you're looking for guidance on strengthening your financial knowledge, developing a clear investment strategy, or improving your overall financial confidence, we’re here to help. Our team offers personalized support and resources to help you take control of your financial future.