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At school you learned to write, read and do arithmetic, you studied history and (a little) geography, then science, art and so on but there is something in which the school programs are very lacking, in every direction: economics and, in particular, financial education.
Not even the courses in technical-commercial institutes delve into this aspect except briefly; so at the end of high school you come out knowing very little about what money is e the various payment systems, we do not understand the dynamics of inflation which, in most cases, will always be considered as a mere progression of prices and no one (or almost no one) bothers to talk about investments and financial products, leaving people at the mercy of myths, such as real estate investment, or incapable of fully understanding the commitment of a loan such as a mortgage and the ancillary costs.
We can say that in Italy (but not only, on the contrary!) there is a situation of financial illiteracy which, in some way, must be overcome or, at least, mitigated. For these reasons, for seven years now, Bankitalia, CONSOB and the Government have sponsored the event Financial Education Month which, this year, falls in November, precisely to promote initiatives aimed at bridging this cognitive gap in the population. But what is this financial education, in the end? Maybe the term is a little scary, bringing to mind complicated mathematical formulas and continuous analyzes of stock market indices, but it is absolutely not a difficult subject for anyone.
It’s simply about a basic smattering of key concepts that are at the basis that allow us to understand in broad terms the functioning of the markets, what the main financial instruments are that one might come across both by reading the newspapers and in daily life when they are proposed to you by your consultant at the bank and, perhaps, not falling for scams carried out by the so-called “fuffa-gurus” who now infest the web or through the increasingly frequent scam calls such as the one on the non-existent “Amazon investment programs” which should lead to large profits with a minimum investment.
Precisely this last point leads to one of the basic assumptions of financial education and, that is, that There are no 100% safe profitable investments. (and not even close to it), the return depends on the risk and the less this is accentuated, the more limited or even zero the profit will be.
Once upon a time, however, there were products that were passed off as safe such as postal vouchers or “index linked” life insurance which “guaranteed” the capital and a minimum return, history has shown how all this was not true, in fact although the first have the capital guaranteed by the State through the Cassa Depositi e Prestiti, it is clear that in the event of default of this it would be difficult to regain possession of the capital and also the returns have, at times, been cut unilaterally as with the famous Q/P series of 1986 while the latter, which still suffer from the risk of failure of the emitter, disappeared after the Lehmann case.
The same real estate investment, to give a concrete example, considered the best for generations is not exactly as efficient as many thought. The basic question, in this case, is “how much is a property worth”? The correct answer would be “nothing, at least until it is placed on the market”. This is because if a property is not rentable it only represents costs (maintenance, utilities, duties and taxes) and it is not at all true that “the brick beats inflation and markets, except in particular cases. It is clear that anyone who bought, for example, a two-room apartment in Milan, in an area which was then redeveloped (like City Life), even about ten years ago, can now obtain a considerable gain compared to the initial investment but what if one had bought it in Gratosoglio when they were talking about the “new Milanese neighborhoods”?
In practice real estate investment is very convenient if aimed at a home where prices are rising or as an investment in areas that are about to become very attractive, both in terms of housing and tourism, but in other cases it risks being very costly, also due to the characteristics of the Italian market, let’s call it viscous, which it does not make it readily liquidatable in case of need.
Effective financial education should help dispel these myths and dispel many fears that may arise when using one’s resources or planning a continuous investment to create the foundations to face the future.
Here, the future is the basic concept to describe the rationale for a solid financial educationbecause knowing the basics of the economy and the tools that can be accessed in the management of one’s resources allows one to be able to design and plan one’s future, through saving and the conscious use of the substances that, over time, one will come to possess . This applies to taking out a mortgage to buy a housewhere not only the mere interest rate must be evaluated but all the additional costs (insurance, management of the application, any installment collection costs for example), as well as for the savings management product that your consultant, sooner or later , he will come to propose to you. Especially in this last category you need to be aware of what you are going to buy, with any pros and cons in order to be able to evaluate whether it is really relevant to your needs and not just those of the commercial campaign underway in this or that intermediary. Obviously, it is not a question of knowing how to analyze a portfolio or an investment strategy but of knowing the types of products that could be approached, whether an active fund, a passive fund, a bond or an insurance product. Everyone has side costs and everyone has a certain degree of risk and this is where a good financial education path ends: with risk assessment.
It is not enough to have a smattering of economic fundamentalswhich is necessary must be reiterated, it is not enough to know the financial products, which is one of the basic elements, but it is necessary to know how to evaluate the risk inherent in the use of capital. The perception and propensity for risk is not the same for everyone and, precisely for this reason, there are no “over the counter” solutions to be proposed massively; it is up to the individual to evaluate and purchase what can really be useful to him and it is impossible to implement this decision-making process with awareness without having some basis in the matter.
The same thing can also be said in the professional field because there are too many professionals who have no concept whatsoever of the financial aspects relating to their work, so much so that they enter into crisis even just in taking out a loan for their company or business.
All this has been underestimated for years, so much so that everything relating to finance has hardly ever been covered at school except in specific courses, often only at university level, and it is therefore important that initiatives such as this of the Month of Financial Education by Bank of Italy, CONSOB and the competent ministries, education and work, so much so that the Ministry of Education and Merit itself, last year, included the principles of financial education within the civic education course indicating, in the words of Minister Valditara himself, that “savings and investment will be central to the growth of children”. This will probably not be an exhaustive discussion but it can certainly be considered a good start, a real investment in the future to stay on topic.
