India - the country with least financially literate people??

Visa carried out an interesting survey early 2012 in 28 countries to guage the strength and weaknesses of financial education worldwide.  Five simple questions were asked like 

• Do you have and follow a household budget?, 
• How many months worth of savings do you have set aside for an emergency?, 
• How often do you talk to your children ages 5 - 17 about money management issues?, 
• To what extent would you say that teenagers and young adults in your country understand money management basics and are adequately prepared to manage their own money? and
• At what age do you think Govt. should require schools to teach financial literacy to children, so that they can better understand money management issues?

It was surprising to see that out of 28 countries surveyed, India stood 23rd, country with one of the least financially literate people.  Per the findings of the survey, only 35% of its population was termed financial literate.

Average savings set aside by Indians for an emergency is approx 1.9 months.  In addition, 41% of the younger respondents aged 18-24 were more likely to have no emergency savings at all compared to older respondents.

Families generally do not talk to their children about money and finance.  Indian families spends only 10 days a year as compared to global average of 19 days / year with their children discussing money issues.

43% of women said they do not understand personal money management issues.

This may sound surprising to many of us, but be practical and ask the above questions to yourself.  

When was the last time you made your household budget and followed it?  Do you even have emergency fund?  Do you know who much amount is available in emergency fund or ideally required?

One may argue that even though I do not do / know the above, I spend my finances rationally and am overall informed about by financial condition.  It is true that above questions alone can not determine whether you are financial literate or not, however it is also true that having a budget and keeping track of it, etc are the preliminary steps one needs to carry out in financial planning.

Are you amongst the one who does not keep track of your finances or do not know about emergency funds?

Source: 

1. Visa's http://www.practicalmoneyskills.com/resources/barometer.php

2. First post's news article

Survey Results: Deciphering your mutual fund investments

In the month of August, Bachhat carried out a survey to ascertain the pattern of retail investors’ investments in mutual funds.  Here we present gist of the results.

One fourth of the participants have never invested in mutual funds

One fourth of all the participants have never invested in mutual funds.  Out of the balance participants who have invested in mutual funds, majority have invested since more than 3 years.

Mutual fund investments comprises less than 25% of the investor’s investment portfolio

Out of the participants who have invested in mutual funds, 67% have less than 25% of their total investments in mutual funds.  27% of the participants have invested between 25% to 50% of their portfolio in mutual funds.

Retail investors invest in equities through mutual fund

All the participants have invested in equity funds, while few have also invested in debt funds (40%) and balanced funds (27%) via mutual fund.  No participants have exposures to the Gilt funds.

Tax benefits

For little less than 50% of the participants, the reason for investment in mutual funds was to avail Section 80C tax benefits.

Investment in mutual funds for long term benefits

Most participants consider mutual fund investments as long term investments with around 53% investing in it for 3 to 5 years, 20% for 5 to 10 years and 7% for period longer than 10 years.

Many still rely on distributors to invest in mutual funds

46% of the participants depend on distributors and agents to invest in mutual funds.  Direct purchase from the mutual fund company comes second with 27% participants opting for it.

SIP is the preferred way of investment

Around 60% of the participants invest in mutual funds through Systematic Investment Plan (SIP).

We shall delve upon the findings of the survey result in subsequent posts.