As part of its Investor Education Month activities, the British Columbia Securities Commission (BCSC) is pleased to announce the launch of a Return on Investment Calculator and an Investment Growth Calculator on its investor education website, InvestRight.org.
The BCSC developed the ROI calculator after conducting survey research that demonstrated that the return on investment (ROI) calculation can be difficult for people to understand.
The BCSC conducted an online study of 300 B.C. residents’ understanding of ROI, asking survey respondents to make calculations based on two questions – a relatively straightforward question and a slightly more complicated one. The survey identified that an “overconfidence gap” significantly widened when respondents answered the more complicated question.
At the outset, the survey asked respondents about their comprehension of ROI, and 86 per cent of respondents indicated a degree of comfort with the concept.
When asked to calculate the first question, 79 per cent of respondents answered correctly – an overconfidence gap of seven per cent. Only 23 per cent of respondents answered the second question correctly, increasing the overconfidence gap significantly to 63 per cent.
The new Investment Growth Calculator shows investors how investment contributions can grow over 20 years. Visitors to the website can choose a portfolio size and see how two different amounts grow. The calculator uses a conservative rate of return to demonstrate that investing on regular basis can increase savings over time through compounding returns.
These new calculators are two featured items in a suite of enhancements to InvestRight.org that enhance user experience, encourage more engagement on the website, and improve overall content presentation.
InvestRight.org also features tools to help investors improve their investment fee knowledge, such as a Fee Calculator, on the Take a Look at Your Investment Fees page.
If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form.