23 January 2019
Investment education is a tool to financial literacy
By Ralph Speirs
Money is one of life's most vital tools, it gives us the power to sustain, maintain, survive and the ability to leave a legacy for our loved ones. Knowing how to make it, spend it, keep it and most importantly make it work to produce more money is of immeasurable benefit.
It is a lesson best learnt at a young age, at home and at schools where young minds are still willing and able to learn the lessons. It is a lesson worth learning at any age.
South Africa has fewer good stories to tell when it comes to financial literacy, saving or investing. The majority of young people start their relationship with money on the back foot and efforts must be made within the financial sector to rectify this.
It is important to instil a different culture in relation to money among the youth. According to the 2018 Old Mutual Savings and Investment Monitor Report, South Africans who can save, save too little and make poor investment decisions and only 19% of South Africans invest in shares.
This presents an opportunity to teach and inform, a chance to change the story and create a new relationship with finances for the country's citizens, and in order to achieve best results, young people need to be included in the solution.
Teaching young people how to make money work for them, through the practice of investing in stocks, is one financial literacy lesson worth exploring. Investment is not dependent on how much you earn. It is an ever present solution to increase your coin and educate yourself about wealth creation no matter how much or how little you earn.
The Johannesburg Stock Exchange (JSE) has an annual initiative known as the Investment Challenge in which high school learners and university students are taught the practical skill of investing in stocks, while sharpening their financial literacy and in turn, through word-of-mouth and the sharing of acquired knowledge, teaching their communities and families what they learn.
This challenge teaches young minds how markets work and they gain an understanding of stock markets as well as how to invest in them, which assists in creating the culture of investing at a very young age.
It teaches them the value of money and the long-term rewards of compound interest and how these manifests in the real world.
Through initiatives such as this challenge, the concept of making money work for you is planted in young minds, further enhancing the opportunity for poverty alleviation, providing a different outlook on money which in the future could change the narrative of the country's saving and investment habits.
One never stops learning, you have to stay curious and take an interest in growing your money. The financial sector is forever changing, it is evolutionary in nature and new products are constantly being developed so, there is always something new to learn. While learning, we also have to be willing to unlearn and teach each other along the way.
Ralph Speirs is the Corporate Social Investment (CSI) Officer at the Johannesburg Stock Exchange (JSE).