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Comments on: Missing the point on financial literacy http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/ The Visible Hand in Economics Wed, 13 Apr 2022 19:23:37 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37792 Wed, 09 May 2012 23:48:37 +0000 http://www.tvhe.co.nz/?p=6928#comment-37792 Good points, all of you.  Good stuff!

]]> By: Raf http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37791 Wed, 09 May 2012 23:45:21 +0000 http://www.tvhe.co.nz/?p=6928#comment-37791 It seems to me that there is a lethal mixture of elements here: heavy media influencing (yes this does make a big difference), poor professional financial advice, search for high yields (greed?), poor understanding of the actual investment (this is the financial literacy issue) and I think also, a constituency that was used to high yields and though property was solid as 🙂

I think we could also add in some seriously poor regulatory oversight (the people who should know about the problems did know…..and sat back and watched. Anyone remember Deborah Hill-Cone’s NBR article on Hanover back in 2004? I do…I wrote to all and sundry about my concerns back then).

Of course, at the core of this issue is “caveat emptor”: investors should think carefully about where they put their money. Sadly, people invest on recommendation and use trusted networks to help them make decisions (think Bernie Madoff) and rarely look closely themselves. Whilst blame and recrimination can be spread around, the buck must stop  with the individual investor (obviously where they were clearly misled, there should be availability to recompense). 

]]> By: Greg http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37717 Sun, 06 May 2012 22:34:19 +0000 http://www.tvhe.co.nz/?p=6928#comment-37717 One party that seems never to be mentioned in the media is the role of the media itself, and newspapers in particular.  There certainly seemed a reluctance (pre-collapse anyway) for journalists to label any finance company as potentially more risky than advertised, likely not wanting to bite the hand that feeds them.  So while it’s easy (and valid) to chastise investors for their lack of financial literacy, it would have been nice to have that chastisement in advance, not just in hindsight.

]]> By: Gary GC http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37715 Sun, 06 May 2012 09:17:38 +0000 http://www.tvhe.co.nz/?p=6928#comment-37715 A particularly good comment on the Herald article directed at Brian Gaynor and written by Bretto from Remuera (naturally selective quotation has been used as Gaynor seems to like this):
“Firstly, “Patterson seems to imply that all investments, with the exception of bank deposits, are greedy.” No, according to your quote he says “some investors” were greedy.”
“I would suggest that you [Gaynor] stick to your day job, but given that you’re supposed to be involved in asset management, that might not be such a good idea.”

]]> By: dragonfly http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37710 Sat, 05 May 2012 22:24:50 +0000 http://www.tvhe.co.nz/?p=6928#comment-37710 When I was in my early twenties (in the early eighties) I had some money I put into finance companies. I did this because the interest rate they paid was higher than that paid by the banks. Even I, who was utterly financially illiterate at that age, understood that the higher return corresponded to higher risk and I was always anxious about the possibility that I would never see my investment again. Anyone who claims to have not understood that higher risk is associated with higher returns is either lying or unbelievably stupid.

]]> By: Nigel Pinkerton http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37707 Sat, 05 May 2012 06:15:45 +0000 http://www.tvhe.co.nz/?p=6928#comment-37707 Just because people were lied to about the level of risk, does not mean that better financial education couldn’t have saved some investors from loosing so much of their capatal (spliting your money between three finance companies is not diversifying people).
“Do we feel sympathy for people who were manipulated into losing all their money – hell yes”.  The main reason I feel sorry for them is they were generally conservative investors – older people or what we like to call “mum and dad investors”.  Its hard to feel for people who chase risky investments for high returns and fail.  But these people thought it was as safe as the bank.  There is plenty of blame to go around for that.

]]> By: D.J.Taylor http://www.tvhe.co.nz/2012/05/05/missing-the-point-on-financial-literacy/#comment-37706 Sat, 05 May 2012 04:34:23 +0000 http://www.tvhe.co.nz/?p=6928#comment-37706 I like (hate?) the fact Geynor has skim-quoted from your collegues article to fit the tangent of his own argument while similtaniously ignoring (misrepresenting?) the actual points your collegue was making. Perhaps he needs to address the personal “literacy” issues he himself seems to have.

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