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Analysis: 3 reasons to do financial literacy



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According to research , in Russia, financial literacy is average. According to this indicator, our country is in ninth place among the G20 countries, behind, for example, Turkey (although in Italy things are even worse with this).

Quarantine is a great time to increase your own financial literacy, because in the conditions of the economic crisis caused by the consequences of the pandemic, these skills will definitely come in handy. Today we’ll talk about why an ordinary person needs to understand working with finances, learn the basics of investing, and how to do it in general.

Reason # 1: making money on bank deposits is getting harder


One of the recent news on the topic of finance - Russian banks have returned to lower interest rates on ruble deposits. This means that it’s becoming more difficult not only to earn money, but to keep finances in the bank.

This fact affects the influx of investors to the stock exchange - over the past year their number on the Moscow Exchange exceeded 3.5 million people. Moreover, according to statistics, a significant number of new participants in the Russian stock market are small investors with deposit amounts not exceeding 50-100 thousand rubles.

An example of these people suggests that the exchange is a very effective tool for working with finances. Of course, novice investors rarely use aggressive strategies, preferring the buy & hold approach - they collect a portfolio of assets and monitor its behavior. This is a good first step.

Reason # 2: making money on real estate is very difficult


Analysts predict that due to a pandemic and a jump in the exchange rate, the volume of investments in Russian real estate by the end of the current year may collapse to the level of 2014. Even in Moscow, the real estate market has been in crisis in recent years, and in the current situation it is not necessary to rely on the fact that you can make money through buying and selling real estate.

In any case, the threshold for entering this market is large enough and fewer people can overcome it, which will further reduce demand.

Reason # 3: the crisis will not end quickly


Tough quarantine measures have already negatively affected the global and Russian economies. According to the official forecast of the Central Bank of Russia, the country's GDP decline in 2020 will be 4-6%. Many companies have already been seriously affected, people are losing their jobs, so recovery from quarantine removal will not be quick.

Obviously, in the current situation, the advantage will be given to people who have additional sources of income - exchange investment is one of them.

Where to begin


The benefits of improving financial literacy are understandable, but how to solve this problem without unnecessary risk of loss?

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At the start of direct investment activity, it is worth taking a closer look at low-risk instruments. These, for example, include federal loan bonds (OFZ), which became the first Russian asset to return to pre-crisis levels. Using OFZ in combination with an individual investment account (IIA) is an excellent defensive strategy for a novice investor.

There are a number of other low-risk tools:

  • structural products are various financial instruments collected in a single portfolio. Analysts of a brokerage company select them in a certain proportion to ensure either minimal or near-zero risk when investing on a stock exchange;
  • model portfolios is an investment tool that consists of several securities selected on certain grounds (for example, bonds or shares of one sector of the economy );
  • ETFs are essentially stock exchange investment funds, which are a portfolio of stocks or other assets that completely repeat the composition of the target index.

It’s worthwhile to start working on the exchange with such tools, since they can seriously reduce risks. Another option is to buy shares in companies that pay dividends .

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