FINANCIAL LITERACY EDUCATION

Topics What is financial education? Investment decision criteria Investment instruments Financial instruments

WHAT IS FINANCIAL EDUCATION?

Financial education is the processby which consumers improve understanding of financial products, concepts and risk OECD (2005)

Through information, instructions and/or objective advice, consumers develop skills and confidence

Become more aware of(financial) risks and opportunities

Make informed choiches Know where to go for help Take other effective actions

to improve financial well-being

What are the aims of financial education for consumers?

Review question

INVESTMENT DECISION CRITERIA

Risk involves the possibility an investment's actual return will differ from the expected return, including the possibility of losing some or all the original investment

Systematic Risk is the uncertainty inherent to the entire national and international market

Specific Risk is linked to the company or to a small group of companies

A return (yield) is the gain or loss of an investment in a specific period including incomes and capital gain

More risk and more potential for higher incomes, capital gains and losses

Can you define the concept and the relationship between risk and return in

financial investments?

Review question

INVESTMENT INSTRUMENTS

Stock is a part of the company's asset and earnings

Bond (corporate or government) is a debt investment

Savings Account Certificates of Deposit (Cds) Mutual funds

What is the difference between bond and stocks?

Review question

FINANCIAL INSTRUMENTS

Interest Rate Personal loan Mortgage loan Revolving credit

What are the main forms for private financing?

Review question

Summary questions

What are the aims of financial education for consumers?

Can you define the concept and the relationship between risk and return in financial investments?

What is the difference between bond and stocks?

What are the main forms for private financing?

FINANCIAL LITERACY EDUCATION