Your financial behaviour can still be messed up.
The problem with financial literacy
According to Wikipedia, in a financial literacy survey:
In Australia, 67 per cent of respondents indicated that they understood the concept of compound interest, yet when they were asked to solve a problem using the concept only 28 per cent had a good level of understanding.
This quickly summarises all that is wrong with financial literacy.
You may get a new tool, but you may not know how to use it best. Imagine yourself holding a knife from the sharp side.
Being financial literate is no guarantee that you would make the right money and investment decisions.
If that was the case, Chartered Accountants, MBAs (Finance) or commerce graduates would not be falling into all the obvious traps – buying ULIPs for investments, investing into real estate trying to become property moghuls, not realising the amount of interest they are paying on the loans.
Not to mention, you sent the concept of diversification limping down a one way street.
One of my clients aptly described his situation as, “The amount of interest I am paying, it feels like I am working for the bank.” Sigh!