Another way to explain investment literacy is to indicate the signs pointing to the lack of it. By indicating what it is not or explaining the opposite, we may be better able to explain what it is and see clearly its meaning. Having explained what investment literacy is all about in previous post, we now turn to the telling signs of lack of investment literacy.
There are four telling signs of lack of investment literacy and these are:
1. Inability to save.
This is the first and the most glaring of the telling signs. With a person’s inability to save, one cannot even speak about investment because there is nothing to invest in the first place. This is true whether one has high or low salary because savings is ultimately a result of mental attitude, understanding and discipline.
Of course, it is true that in general, the higher the salary the greater the ability to save but this is not the determining factor. The determining factor is the perception and understanding and discipline to carry out what one understands on what it takes to save.
2. The tendency to get lured towards impossible earnings schemes
Throughout the years there has been a plague that kept on sweeping the land and victimizing people from all walks of life. This is the plague originated by Mr. Ponzi, the classic pyramiding scheme. This has kept resurrecting through all these years as if Mr. Ponzi rises from the grave like Dracula to wreck havoc and suck the financial blood out of the innocent and uninitiated. Each time, the scheme never fails to leave a swath of impoverishment to hundreds, if not thousands of victims. In 1997, the government of Albania fell as hundreds of thousands of victims, impoverished by the widespread pyramiding scams, blamed their government for the fiasco.
The legendary investor John Bogle, founder of the Vanguard Group of Mutual Funds, once remarked that any return on investment beyond 15% per annum should better be considered “found money”. While this may not have to be taken literally, it simply is better treated as a “caveat” which means that investors should be wary of investment schemes promising fixed returns of more than 15% per annum (approximately double-your money in 5 years).
Thus, if one happened to get lured to any of the “Legacy-like” schemes which promised double your money in 2 or 3 years, one is simply not investment literate.
This is the most obvious of the telling signs. The fact is: one gets victimized by any of these schemes simply because he is not literate in investment. A person who is literate in investment simply sees immediately that any scheme offered is within the purview of “impossible earnings”.
Having said this, I have to qualify that the 15% mentioned above only applies to fixed returns. This does not include schemes that do not offer fixed returns like investing in stocks or mutual funds. We will turn to such type of investments in later postings.
3. The tendency to accept unwanted risks and burdens
People who can save some amounts from their earnings/salaries in view of higher-than-usual earnings rate, have the tendency to accept additional risks and burdens without much thought. The risks and burdens may come in many forms. It usually comes ironically from friends and relatives who have lower earning capacities and who saw the OFW relative as an ideal source of low-cost or free equity funding.
Thus, an OFW may easily find that friends and relatives back home (not members of his own immediate family) suddenly become business-minded even without the slightest training, orientation or knowledge of the type of business or of the inherent risks involved or of the economics of the business or industry. The most favorite is the transport business (taxi, fx, jeepney business) or agriculture-related like piggery. The project proponent usually does not have a modicum of a business plan, let alone a feasibility study.
The typical OFW finds it extremely difficult to turn down such proposals simply because, not being literate in investment, he does not understand the risks involved and has no clear theoretical foundation or “anchor” to base his decisions. Furthermore, he fears that the friend or relative may feel bad or get angry with him if he turns him down. Many an OFW faced such predicaments and relented out of “hiya” or fear of the other party feeling bad. The OFW then invariably suffers the eventual loss.
4. Business mentality
The OFW often assumes that after his stint abroad or after having accumulated some amounts after his stint abroad, he should go into business. This mentality is extremely prevalent and it is simply assumed that the next stage for an OFW is to be a businessman of sorts. Ironically it is the government itself which wittingly or unwittingly, has become a key purveyor of such mentality. I remember a key politician visiting Riyadh a few years back exhorted the OFW community to become businessmen.
Business mentality is a “tunnel vision”, a narrow thinking that assumes business as the only desirable path an OFW should take after his stint abroad.
The fact is that business is not for everybody and there are alternatives for OFWs which are much easier to succeed with than getting into business. It is extremely difficult to succeed in business while it is fairly easy to protect ones savings and obtain reasonable earnings with due diligence study of alternative instruments available, some of which are even available in one’s neighborhood.
For instance, the OFW can invest in the 5-year time deposits offered by some reliable savings and development banks which, just a few years back elicited gains of as much as 10% per annum. For the more advanced, there is another alternative the Philippine mutual funds some of which have fairly commendable track records. The point is, there are alternatives from going into business but alternatives are usually beyond the thinking range of OFWs having been deeply conditioned in business mentality.
Lest some readers may misinterpret that I am against OFWs going into business, I have to add here that going into business is a desirable option for OFWs who are willing to spend a great deal of time and effort studying and preparing themselves into going into business. This will be a subject for future postings.
From my own experience, when it comes to investment, it still boils down to education, common sense and healthy dose of skepticism to avoid being victimized by scammers, con artist and the like. Always remember, if it looks to good to be true, it probably is!
Well said, Terry. I think you have done your homework well and are about ready for more advanced investing like mutual funds and stocks which we will take up later in this blog. Thinking ahead, I have to add that there are also sophisticated type of scams (not the pyramiding type) which are difficult to detect. The scammers prey on mutual fund and stock investors. We will expose/explain them all here in future posts. The beauty of having readers comment or react is that it helps the blogger to chart future compelling topics.
Really nice post,thank you cna training
You’re welcome. Very nice to hear a non-Filipino also reading my blog. Another post live today.
I know you probably have to disagree, but if you can’t beat them, join them.
I leave that for the other readers to agree or disagree.
Thanks for the post
oh cool, this information is really useful and definately is comment worthy! hehe. I’ll see if I can try to use some of this information for my own blog. Thanks!
Thank you for the useful information! I wouldn’t have discovered this on my own!
You completed various nice points there. I did a search on the subject and found the majority of folks will consent with your blog.
Resources like the one you mentioned here will be very useful to me! I will post a link to this page on my website. I am sure my site visitors will find that very helpful.
This is this kind of a wonderful resource that you’re providing and you give it away for free. I love seeing web sites that comprehend the worth of offering a top quality resource free of charge. It?s the old what goes around comes around routine.
Thank you for posting on this aspect, keep it up. colon cleanse
Gracias for this wonderful post. I will be visiting this site for more awesome info.
Several with the factors related with this weblog publish are usually advantageous nonetheless had me personally wanting to understand, did they seriously imply that? One point I have acquired to say is your writing experience are excellent and I’ll be returning back again for any brand-new blog post you come up with, you may probably have a brand-new supporter. I guide marked your weblog for reference.
yo soy deprimida …
Have a nice day
Socco
Salute, I have always thought of earning some money with buying silver rounds? Is it possible? Maybe You have tried it? Bye bye!
Have a great day!. Your blog has been the highlight of my day Breast Enhancement pills
Thanks for your nice comment.
Amazing, your page came up first in Google.
And this is what I was looking for.
This blog is really good. How was it made !
Hola,
Come On
Gracias
Dougles
for a second time, a long time for me one or two things I wanted. Well just use this one, much appreciated. I need it for a project, and mine is on the same subject as yours. Thanks, great share.
Hey,
Cool post! I just stumbled on it and now I’m a dedicated reader.
Pretty nice post. I learn today’s truck owner on different blogs everyday. Selecting stimulating to learn to read content from other writers and be taught a little something from their site. I want to use some of your content on my blog if you can’t mind. Natually I’ll make a link back up in website. Appreciate your sharing.
really. a great deal of to talk about on something
I’m not capable of see this website correctly on my cellphone
Well, sorry but I can’t possibly help you on that.
Have you considered adding some social bookmarking buttons to these blogs. At least for myspace.
Social bookmarking buttons will come at the right time – hopefully after I conquered some of my immense technical inadequacies.
Hey it is a real cool web site
I am often interested in delighted. This article really peaks my interest. plan tohttp://newsbabble.info/verizoniphone377.html
Hey, i’ve been reading this website for a while and have a question, maybe you can help… it’s how do i add your feed to my rss reader as i want to follow you. Many thanks.
I know this sounds cliche, but thanks for a sharing this article, nice touch and with more comments, come more traffic no?.
Resources these as the one you mentioned right here will be incredibly useful to myself! I’ll publish a hyperlink to this web page on my personal weblog. I’m certain my site site visitors will discover that fairly valuable.
I’d prefer to thank you for that efforts you’ve got produced in writing this article. I’m hoping the exact same greatest work from you within the future also. In reality your inventive writing abilities has inspired me to start my very own BlogEngine weblog now.
I admire the beneficial info you provide inside your articles or blog posts. I will bookmark your weblog and also have my youngsters examine up right here frequently. I’m very positive they will discover a lot of new stuff here than anybody else!
Thank you for another good write-up. Where else could anybody get that type of info in this kind of a perfect way of writing? I’ve a presentation subsequent week, and I’m around the appear for this kind of information and facts.
Youre so right. Im there with you. Your weblog is absolutely worth a read if anybody comes across it. Im lucky I did because now Ive obtained a whole new view of this. I didnt realise that this issue was so important and so universal. You certainly put it in perspective for me.
Please tell me that youre going to keep this up! Its so good and so important. I cant wait to read additional from you. I just feel like you know so considerably and know how to make people listen to what you have to say. This weblog is just too cool to be missed. Great stuff, definitely. Please, PLEASE keep it up!
I totally agree. Can you give them scores? Lately I’ve been following Damon Vickers, a finacial guru from Seattle. If you havn’t read his book about dollar collapse, you should get your hands on a copy. I believe that the population don’t really know the magnitude of the situation we face today. To have a top strategist like Damon Vickers, who called the market plummet in both 2000 and 2008, publicly express the fears of many of the approach of a one world government is exceptional. Either way, cool list and can’t wait ‘til the next article
Well, thanks for agreeing. I haven’t thought about such thing as giving them score. Maybe I’ll do so sometinme in the future. Thanks for the appreciation and thanks for the info on Damon Vickers. His insights would certainly be helpful.
I thought it was heading to be some dull previous publish, however it truly compensated for my time. I’ll post a link to this web page on my weblog. I am certain my website visitors will find that quite useful.
I think youve produced some actually interesting points. Not also many people would in fact think about this the way you just did. Im definitely impressed that theres so considerably about this subject thats been uncovered and you did it so well, with so significantly class. Good 1 you, man! Genuinely wonderful things here.
Ive been meaning to read this and just never got a chance. Its an issue that Im pretty interested in, I just started reading and Im glad I did. Youre a terrific blogger, 1 of the very best that Ive seen. This blog undoubtedly has some data on topic that I just wasnt aware of. Thanks for bringing this stuff to light.
really great stuff…
Brilliant, thanks, I will subscribe to you RSS now.
I consistently visit your site! Thanks for all the fabulous articles.
I was exceptionally pleased to uncover this site.I wanted to thank you for this wonderful read I certainly enjoying just about every little bit of it and I have you bookmarked to take a look at new stuff you publish.
This site has got some extremely useful stuff on it. Cheers for sharing it with me!
great blog but some pictures will make it better
Wanted to drop a comment and let you know your Rss feed isn’t working today. I tried including it to my Yahoo reader account but got absolutely nothing.
You really hit the nail on the head…
Great artical, had no problems printing this page either.
This was a really pretty great post.
Is it alright to place a portion of this on my personal site if I publish a reference point to this webpage?
Just discovered this site thru Yahoo, what a pleasant shock!
The author has prepared an informative article. You’ve created your level and there is not substantially to argue about. It can be like a universal truth that you simply can not argue with. Many thanks for the data. http://simplyhostingreview.com/wiredtree-hosting-reviews/
You are a great blogger, I expect browsing more of your blogposts in the future.
Hey can I quote some of the content found in this post if I reference you with a link back to your site?
Sure, you can do so. And thanks for the comment.
Very nice style and fantastic content , nothing at all else we want : D.
Finally, got what I was looking for!! I definitely enjoying every little bit of it. Glad I stumbled into this blog post! smile I have you saved to check out new stuff you post. My best regards, Grazyna.
I wanted to say that it’s awesome to know that somebody else also pointed out this as I had trouble finding the same information anywhere else. This was the first place that told me the answer. Thanks. My best regards, Karma.
That is some inspirational stuff. Never knew that opinions could be this varied. Kudos for all the enthusiasm to offer such handy information here. Regards, Zenia.
Thankyou for all your efforts that you have put in this. very interesting info .
I just got out of sleep and I am already reading your articles. This means something! Really useful info. Thank you!
I always was interested in this topic and still am, appreciate it for posting .
I just now wanted to thank you one more time for this amazing web page you have created here. It can be full of useful tips for those who are genuinely interested in this subject, particularly this very post. Your all amazingly sweet along with thoughtful of others as well as reading your blog posts is an excellent delight in my opinion. And what generous gift! Jeff and I really have excitement making use of your tips in what we have to do in a few weeks. Our checklist is a mile long and tips will definitely be put to great use.
You really make it seem so effortless with your presentation but I find that topic to be really something that I think I would in no way understand. It seems too complicated and extremely broad for me. I am looking forward for your next post, I can try to get the hang of it!
I like this post, enjoyed this one thanks for posting .
Even the most financial or investment literate persons fall prey to greed or fear. This only means that emotion is still more powerful than the mind.
This is the reason why we have the tendency to splurge when we are depressed.
Pingback: What Kind of Journalism Would Be Best for Making Investors Out of an OFW Nation | The OFW Microinvestor
Pingback: My Homepage
Great post. I was checking constantly this blog and
I care for such info much. I was looking for this certain info for a long time. Thank you and best of luck.
I’m impressed! Very useful info particularly the last part
I am not sure where you are getting your information, but good topic.
I needs to spend some time learning more or understanding
more. Thanks for magnificent info I was looking for this info for
my mission.