Educated money: how education transforms savings into investments

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High level of financial knowledge allows us not only to ignore the pyramids, but to do business better by choosing the most profitable projects, and therefore leads to economic growth

The need to be financially literate is not just a fashionable trend, but a necessity. Knowledge about basic financial and insurance products, the difference between a normal Bank and “cleaner” with off-balance sheet deposits, is it possible to buy bitcoins and, of course, the eternal question of when to buy the currency, elements of daily life.

Financial answers

It is known that Russia, far from the countries — leaders by the level of financial literacy. Hate “talking” were the results of a study of S&P, according to which only 38% of Russians proved to be financially literate. Less than in Zimbabwe or Mongolia! The highest rates are found in Scandinavia and the lowest in South Asia.

Sad is the fact that the results of the HSE study only 2% of Russians believe that well versed in Finance, while 20% estimate their level of knowledge and skills as a zero, and another 46% consider them unsatisfactory.

However, on may 24, a report released by the OECD on financial literacy among students; the studies were carried out worldwide in 2015. The results of this report were that on average, high school students from Russia better educated than their counterparts across OECD countries: among the 15 surveyed countries we occupy 4-5-th place, ahead of USA, Australia and Italy. Moreover, since the first report on Russia (since 2012) the quality of responses has increased somewhat. Of course, only 11% of the students show higher scores in financial literacy, but for Russia it’s a brilliant achievement.

It’s all in the age of the participants: HSE and S&P were interviewed adults, PISA (Programme for International Student Assessment) test, is focused on students. Of course, more young Russians are more confronted with financial products, before you meet them in the lives of their families, in the end talking about financial literacy lessons for social studies in schools. Released in 2016, the textbook for the ninth grade Alexei Goryayev (NES) and Valery Chumachenko, written in collaboration with the Bank of Russia, Ministry of Finance and a lot of experts will also add the quality of school education. The Russian government is involved in financial education and with the support of the savings Bank actively carried out the nationwide financial literacy week

Knowledge is money

Why is it important? Economists see the link (hardly a fully causal) level of GDP per capita and financial literacy. Probably a higher level of knowledge allows us not only to ignore the pyramid MMM, but to do business better, to select the most profitable projects to invest efficiently and therefore leads to economic growth.

Competent decisions of private investors directly affect the condition of the financial market. In Russia an extremely low level of understanding of its services. For example, the head of CSR Alexei Kudrin reasonable offers to put savings in three currencies — dollars, euros and rubles. But in developed markets the main goal is to teach people how to invest in stocks, bonds, to diversify the portfolio in order to gain long-term profits from the increase in the value of investments. Even in Russia there are different possibilities, though risky, in particular ETFs, mutual Funds, stocks/bonds, etc.

Is it possible to save up for a good retirement, if you do not wish to risk for the sake of a higher average yield? Usually — no. Euros, dollars and rubles have a very low interest rate on these deposits is difficult to achieve a large income. In the end, to the state, which wants to divest itself of at least some of the pressure on the state pension Fund, there is an urgent need to attract people to invest. For example, through individual investment account. To date, Russia’s share in world value of the shares negligible — according to the world Bank, less than 1% in 2016.

Of course, the movement towards financial literacy will help and new services that are introduced to us in particular, mobile applications for purchase of bonds. But the step from “Euro-dollars-roubles” to “I understand that part save and part of the invest to retire” is very large.

And private pension funds is still quite presentable. If market participants lose billions just because of transfer to another Fund as at the end of 2016 declared the RPF, the situation clearly calls for more transparent regulation and better conditions for the ordinary investor. The simplest would be connecting the “index options” in which to save could be in the funds with low costs and long-term perspective on profitability. The General state of the economy is largely dependent on the skill, including the state, to build up attract money.

The authors ‘ point of view, articles which are published in the section “Opinions” may not coincide with ideas of editorial.

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