Why use a financial adviser?

Manage your assets

Protect your wealth

Build your legacy

Five questions that indicate how financially literate you are.

Australia has a relatively high level of financial literacy when ranked globally. In
a study of 140 economies, Australia ranked in the top 10 countries for financial
literacy.

.

 
Notwithstanding this favourable global performance there is widespread financial illiteracy within Australia, particularly amongst young people. There are also large and significant gender gaps with women, on average, less financially literate than men.
 
Statistics suggests that around 8.5 million (or 45%) of adults in Australia are financially illiterate.
 
The following five questions indicate how financial literate you are:
 
Q1: Interest Rate: “Suppose you put $100 into a no-fee savings account with a guaranteed interest rate of 2% per year. You don’t make any further payments into this account and you don’t withdraw any money. How much would be in the account at the end of the first year, once the interest payment is made?”
 
Q2: Inflation: “Imagine now that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, would you be able to buy more than today, exactly the same as today, or less than today with the money in this account?”
 
Q3: Diversification: “Buying shares in a single company usually provides a safer return than buying shares in a number of different companies.” [True, False]
 
Q4: Risk: “An investment with a high return is likely to be high risk.” [True,False]
 
Q5: Money Illusion: “Suppose that by the year 2024 your income has doubled, but the prices of all of the things you buy have also doubled. In 2024, will you be able to buy more than today, exactly the same as today, or less than today with your income?” or “don’t know”.
 
NB: To some these questions are easy to answer but remember that research has found that around 8.5 million Australians will struggle to answer all five.

Latest Newsletters

Hot Issues

Read more latest Financial Planning news articles

Retirewell Financial Planning Pty Ltd
ABN 29 070 985 509 | AFSL No. 247062
Phone 07 3221 1122 | Fax 07 3221 3322
Suite 6A, Level 6, 79 Adelaide Street
BRISBANE QLD 4000

General Advice Warning

The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Retirewell Financial Planning nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.