Issue link: https://maltatoday.uberflip.com/i/1505323
NEWS 9 maltatoday | WEDNESDAY • 9 AUGUST 2023 JAMES DEBONO MALTESE have fared modestly in a recent Eurobarometer survey that assessed the financial knowl- edge of respondents in all EU member states. Maltese emerged more knowl- edgeable than respondents in 14 other member states and less knowledgeable than respondents in 12 other member states. In the survey 26% of Maltese re- spondents answered at least four out of five questions correctly compared to 25% of respondents in the entire EU. A majority (54%) of Maltese re- spondents answered only two or three questions correctly, while 19% could not answer any ques- tions correctly or managed to an- swer only one out of five. The Maltese were far less knowl- edgeable than respondents in the Netherlands, Denmark, Finland and Estonia where about four in 10 respondents replied correctly to four out of five questions. The least knowledgeable were the Ro- manians (13%), the Portuguese (16%) and the Cypriots (19%) In the survey respondents were presented with five financial knowledge questions. 74% of Maltese respondents correctly replied that an invest- ment with a higher return is risk- ier, while 64% gave the correct re- sponse to the question about how inflation works. 58% of Maltese understood the value of diversifica- tion in investing and 43% answered correctly when asked about com- pound interest. However, just 24% understood the link between inter- est rates and bond prices. The question about bond pric- es turned out to be the trickiest question for respondents in all EU member states. Respondents were asked: 'If in- terest rates rise, what will typically happen to bond prices?' Only 24% of Maltese respond- ents correctly replied that they will fall. But the Maltese are not alone in their lack of knowledge on this aspect. Only 20% of all Eu- ropeans replied correctly. The easiest question in the sur- vey was one which asked respond- ents to state whether an invest- ment with a higher return is likely to be riskier than one with a lower return or less risky than one with a lower return. Only 5% of Maltese respondents in comparison to 9% of all EU respondents incorrect- ly replied that this would be less risky. 58% of Maltese also correctly re- plied that an investment in a wide range of "company shares" is likely to be less risky than an investment in a single share. Maltese rank fourth on financial behaviour Apart from assessing the finan- cial knowledge of respondents in different EU countries, the survey also shed some insight on their fi- nancial behaviour. When it comes to questions re- lated to financial behaviour relat- ing to choosing products, keeping track of expenses and striving to achieve financial goals, 71% of Maltese scored highly, placing fourth among all EU member states. Curiously the Romani- ans who scored low in financial knowledge questions, scored the highest in these questions, with 82% registering a high score in common sense questions. 96% of Maltese agree that one should consider whether you can afford something before you buy it. A similar proportion of re- spondents said that one should keep track and monitor expenses and nearly eight in ten respond- ents agree that one should set long-term financial goals and strive to achieve them. The survey also awards an over- all financial literacy score which combines financial knowledge and financial behaviour, giving both aspects equal weight. In this aspect 20% of the Maltese were given a high score compared to 18% of all EU citizens. Only 13% of Maltese were given a low score compared to 18% of all EU cit- izens. In this regard Malta was ranked seventh among all 27 EU member states in a joint place with three other countries. The proportion with a high score varied between 11% in Por- tugal and Latvia to 27% in Den- mark, Slovenia and Sweden, and 28% in the Netherlands. Across all Member States, more than 10% of respondents have a low score on overall financial literacy, with the highest proportions being observed in Finland (27%), Latvia (24%), Belgium (22%) and Spain (22%). 35% have enough saved to last more than six months The survey also sheds light on saving patterns in different EU countries. The survey shows 35% of the Maltese have enough savings to last six months or more without having to resort to taking loans if they lose their main income. In contrast 10% have no sav- ings at all, 9% have enough savings to last a week, 14% have enough savings to last between a month and three months and 16% have enough savings to last between three and six months. The survey also shows that 23% of Maltese have a private pension while 25% have a life insurance. The survey also shows that 48% are not confident that they will have enough money to live comfortably throughout retirement years compared to 54% of all EU respondents. Maltese rank 13 in financial knowledge, EU survey shows Respondents were asked five questions assessing their wisdom on financial matters • 26% replied correctly to at least four questions