For more than 10 years people have spoken about the three key components of financial literacy: budgeting, saving and investing.
The first two components are self-explanatory whilst the latter is often more difficult to master.
Worse still is that Investing has a bad reputation. If you still watch television there is a lot of focus on Ponzi schemes, frauds, bad financial advice, bankruptcies and so many other issues that the only options I had 5 years ago were either to change job or not watch television.
I chose the most difficult one. I turned off the television and never looked back!
Nevertheless, this is not a possibility for many people, so the only choice you have is to educate yourself in investing and believe that the power of compounding returns is the solution to growing your savings exponentially.
With historically low returns on deposits and fixed income investments, the only solution is to look for higher return products which naturally carry a higher risk, yet investing in equities or funds is not something that people are familiar or comfortable with.
Knowledge is power and, although they have been with us for more than 30 years, structured products are beginning to draw more interest from investors as they are delivering higher returns when compared to traditional term deposits.
I’m not suggesting that everyone should start buying complex structured products, such as the famous “I kill you later” accumulators used by professional and savvy investors. Instead the secret to mastering financial literacy is a lower risk structured product, coupling potentially higher returns with capital protection.
Of course, if you want to work until you’re 100 years old then maybe keep investing in deposits and fixed income funds!
