HOW TO DEVELOP FINANCIAL LITERACY?

BECOME MONEY SMART!

Development financial literacy in an going continuous journey. First step towards financial literacy development starts with realization of own inadequacies related financial decision making skills. If an individual is able to accept that he/she needs skills development and show eagerness to learn, he/she will search for sources to develop these skills. It could be books, journals or even training from experts. Financial literacy cannot work without certain degree of emotional balance in an individual.

SOURCES OF FINANCIAL LITERACY DEVELOPMENT                                                                                        Let us look at various sources for developing our financial literacy to make us fitter, stronger and sharper. Sources that will make us money smart.

FINANCIAL PRODUCTS BROKERS / ADVISORS
These could be insurance agents and distributors and agents selling Mutual Fund products. They may be operating in both online and offline space.

STRENGTHS
They could be good source of information and support for those who have less knowledge about various finance products. Usually they are situated in neighborhood and may be known to common friends.

WEAKNESSES
• Most of the brokers, agents and advisors have an inherent Interest to push financial products of the firm that they represent which may not be the most suitable for your needs. It could be due to their lack of knowledge about other financial products or non-availability of such products in their basket or profit motive.
• Very often, they push or promotes products on which they get higher commission, often sacrificing suitability of the product.
• They deliberately or otherwise overlook other more suitable investment opportunities available to the investor.

Example –An insurance agent may try hard selling a high commission laden” endowment insurance scheme” and may not discuss with you about low commission laden “Term insurance”.

CHARTERED ACCOUNTANTS
They are qualified and trained in accounting, taxation and finances. They usually have good understanding of related laws too.

STRENGTHS
Generally, they have good understanding of various financial products and its implication on the point of view of appreciation and taxation.
Because they are qualified, they can quickly learn about new finance products too.

WEAKNESSES
*Most often they are linked to annual income tax returns and their primary concern is proper filing of IT returns.
• They have only an indirect “understanding “ about various finance products.
• Investments decisions often have to be taken many times during the year and it can not be linked or tied down to annual IT returns. They cannot participate on continuous basis.

REAL ESTATE BROKERS
Real estate brokers play major role while buying and selling of properties in cities and small towns. They can provide useful information about properties consist of current rates and probable development of the region in future. And, also legality of the asset.

STRENGTHS:                                                                                                                                                                      knowledge of the geographical location and history of the seller or the location are themajor strength that they offer. They can quickly gauge the customer needs /background and make multiple offers or options.

WEAKNESSES:
It is rare to find 100% honest real estate brokers .Often they peddle in lies, half truths and less them needed information to force a sale. They wish to see sale taking place fast and then, there is tearing hurry to collect commission

CERTIFIED FINACIAL PLANNERS[CFPs]
These are qualified professionals handling personal finance of individuals. They have passed qualifying examination from Finance Planning Standards Board of India and carry title CFP.Normally they give an integrated financial planning for individuals: Financial planning needs analysis, Investment planning in terms of assets and products, Retirement planning, Real estate planning, Mutual fund planning, Insurance planning, Taxation, Estate or will
arrangement etc.

STRENGTHS
-They are well qualified and have minimum standards of subject knowledge.
-Usually they have ethical standards.

WEAKNESSES
-They charge on hourly basis or annual basis which could vary from Rs 5000 -Rs 50,000 for an individual, which will work out to be expensive for those in low income bracket.
-They do not spend time in educating an individual and hence, unless you are well versed in various finance products, you will be forced to follow advice blindly. You need to have high level of financial literacy to take part in the planning process and take most apt decisions.

BOOKS ON INVESTING AND PERSONAL FINANCE
Books are an excellent source of information and guidance for those seeking to become financially literate or those searching for higher knowledge in this area.

Some of the “must read” books are as follows:
• THE INTELLIGENT INVESTOR
Benjamin Graham.
• SECURITY ANALYSIS
Benjamin Graham.
• THE LITTLE BOOK OF COMMON SENSE INVESTING
John Bogle
• ONCE UP ON WALLSTREET
Peter Lynch
• A RANDOM WALK DOWN WALL STREET
Burton Malkiel
• COMMONSTOCK AND UNCOMMON PROFITS
Philip Fisher
• HOW TO MAKE MONEY IN STOCKS
William ‘O’ Neil
*ONE UP ON WALL STREET
Pater Lynch
• THE WARREN BUFFET WAY
Robert Hagstrom
• BUFFETOLOGY
Mary Buffet
• IRRATIONAL EXUBERENCE
Robert Shiller
• THE MOST IMPORTATNT THING
Howard Marks
• THE ALCHEMY OF FINANCE
Gorge Soros
• RICH DAD POOR DAD
Robert Kiyosaki
• EXTRAORDINARY POPULAR DELUSIONS AND MADNESS OF CROWDS
Charley Mackey
*The Richest Man in Babylon
George Clason

PRINT MAGAZINES
*MONEY by OUTLOOK
– Money today – India group
– Money life
– Dalal street investment journal
– Captial Market
– WEALTH by Economic Tiimes

ONLINE JOURNALS

Money Control
Valueresearch Online
Economictimes
Capitalmaster

TELEVISION SHOWS
-CNBC
– ET
– PROFIT TODAY

NEWS PAPERS
– ECONOMIC TIMES
– FINANCE EXPRESS
– BUSINESS STANDARD

WARNING
*Never depend on single or few sources for your financial literacy development.
*Check out with multiple journals, books and people.
* Keep a “healthy disrespect” for each opinion. Meaning, check and recheck.
*When events and data changes, you must change. Nothing is permanent.

This blog is written by Simon Daniel, a double postgraduate in management sciences, Ex CEO and Director of leading Companies with 35 years track record .He has established two successful start ups too. In Quora [www.quora.com] , he went on to become World No.1 writer in Personal finance advice and investing advice topics, being called a “personal finance guru”
He is the author of highly acclaimed book titled:
ALL ABOUT MONEY BECOME MONEY SMART!
The book is a comprehensive guide to saving, investing, spending, borrowing and protecting-thefive key financial literacy competencies essential for all people.
Book is sold in all leading online stores in India and globally. It is sold through Author’s website Simon Daniel And All So Amazon or Flipkart