There’s a good chance you don’t know as much as you think you do about investing and retirement saving. But that’s okay.

About 25 percent of people are overconfident when it comes to their knowledge of investing, saving, taxes and insurance, according to a survey of 4,300 people by the National Association of Retirement Plan Participants, a nonprofit that works to improve retirement saving. That’s the share of people who said they knew a lot about those topics but scored low when their knowledge was put to the test in a quiz.

Another 25 percent underestimated how much they knew about personal finances, reporting low levels of confidence but scoring high on the quiz. About half of those surveyed received scores that pretty much matched what they said they knew. (Want to see how much you know about investing? Scroll down to try your hand at the quiz.)

People were more likely to understand terms like “fixed income” but were confused by the definition of terms such as “basis points” and “managed accounts.”

The mismatch says something about the learning process, according to Warren Cormier, chief behavioral officer for the National Association of Retirement Plan Participants. As people learn more, they begin to realize how much more they have yet to learn, he says, and their confidence takes a blow.

In the broader world of investing, overconfidence can be dangerous. But within the confines of a retirement savings plan, where investing choices are limited and fiduciary rules often prohibit use of the riskiest options, it might not be so bad, Cormier says.

That’s because people who are confident — or even overconfident — in their finances are more likely to take action, he says. They might decide to save more than they have been or they might take more risk with their portfolios, giving their money more room to grow over time, he argues.

On the other hand, people who know more about investing but don’t trust their instincts might have the tendency to be more reserved with their savings, Cormier says. That limits their losses, but also restricts how much their money can grow. “They’re kind of frozen in uncertainty and make fewer decisions,” he says.

It’s not always that simple, of course. Some people might take risks with their savings that make them too vulnerable or they might move money around at the wrong time.

But the study also found another way that confidence pays. The people who believed they could one day save enough money to retire also saved a bigger share of their income than people who weren’t as confident, the report found. Those people were less likely to feel like their efforts to save were futile, Cormier says, and therefore saved more.

The study focused at what retirement plan record keepers, such as Charles Schwab, Vanguard and Fidelity, could do to boost financial literacy and improve people’s understanding of retirement savings. Bank of America Merrill Lynch scored highest on the index of financial literacy and trust, followed by Fidelity and Vanguard.

How much do you know about investing? Test your knowledge with this quiz from the National Association of Retirement Plan Participants:

1

Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? 

More than $102
Exactly $102
Less than $102

2

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account? 

Buy more than
Exactly the same
Less than today with the money in this account

3

 If interest rates rise, what will typically happen to bond prices? 

If interest rates rise, what will typically happen to bond prices?
They will fall
They will stay the same
There is no relationship between bond prices and interest rates

4

Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund."

True
False

5

Which of the following statements describes the main function of the stock market? 

The stock market helps to predict stock earnings
The stock market results in an increase in the price of stocks
The stock market brings people who want to buy stocks together with those who want to sell stocks
None of the above

6

Considering a long time period (for example 10 or 20 years), which asset normally gives the highest return?

Savings accounts
Bonds
Stocks

7

Normally, which asset displays the highest fluctuations over time? 

Savings accounts
Stocks
Bonds

8

When an investor spreads his money among different assets, does the risk of losing money increase, decrease or stay the same? 

Increase
Decrease
Stay the same

Your score: 0 / 8

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