By: Tom White

On an international scale, young people are investing more than ever before. Despite uncertain economic conditions, contentious global politics, and numerous other extreme factors, the new generation is fascinated with investing. But do they have the best tools at their disposal?

Considering that 70% of retail investors are under 45, equipping them with the right tools and knowledge is crucial to their success in navigating complex financial markets. A huge factor in this demographic shift is the digitally driven world these younger individuals have grown up. 

Technological advancements over the past several decades have reduced barriers to entry worldwide and democratized markets everywhere. As a result, younger people have unprecedented access to investing opportunities but may need the tools to evaluate and navigate said opportunities correctly.

Globally, young people’s financial literacy rates hover below 50%. These statistics indicate the dire need to improve access to financial information and education. Even though this younger generation is excited about investing, many cannot effectively and meaningfully parse such investment opportunities.

The Challenges: A Financially Complex World

The financial landscape has changed immensely over the past 40 years. There has been a significant shift from pensions to employer-backed retirement plans. Thanks to the internet, the proliferation of readily available financial products means that financial choices now require more intensive decision-making processes. 

Additionally, rising living costs and inequality pressure individuals to plan if they wish to succeed.

All these factors have led to a world in which the younger generation is gung-ho about investing and the opportunities for financial benefits that it brings.

The Role of Financial Literacy

Financial literacy has numerous profound benefits. It can lead to higher investment returns, better debt management, lower borrowing costs, and improved retirement planning and financial well-being.

The global financial literacy rates below 50% underscore the need for comprehensive educational efforts in schools, workplaces, and online. To paraphrase the age-old adage, “Ignorance is bliss… temporarily.” While not knowing the full extent to which your investing is falling short might be blissful at the moment, it will most certainly not be in the long term. The more you know about finances and investing, the more capable you will be of identifying good deals, bad deals, and what differentiates the two.

Barriers to Financial Education

Financial information remains inaccessible or overwhelming for many due to jargon-filled content and a distinct lack of financial education in school curriculums.

For example, only 33% of adults globally are financially literate. That’s a terrifying statistic to consider, as it means that the educational systems across the globe have been failing students in this area for generations. Fortunately, there are solutions that you can work toward.

Solutions for Building Financial Literacy

• Educational Efforts in Schools: Understanding the importance of introducing financial education early to develop healthy habits is critical and is gradually bringing about change for a new generation.
• Workplace Programs: Such behavior can be rewarded and encouraged by encouraging employers to offer courses and workshops and highlighting startups innovating in this space.
• Technology & Gamification: In recent years, the popularity of apps and tools that gamify financial education for accessibility and engagement has boomed. To this end, it is also essential that these resources present unbiased and accurate information, as do popular media formats like YouTube and podcasts.
• Responsible Trading: While technology provides powerful tools for financial management, it’s crucial to use them responsibly. For instance, when exploring sophisticated trading tools like MetaTrader 4, it’s essential to prioritize education and understand the associated risks.

Empowering a Financially Literate Generation

Policymakers, financial institutions, and community organizations must collaborate to provide accessible, engaging, and unbiased resources that empower young investors to make informed decisions and achieve long-term financial stability.

Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.

Published by Mark V.