It seems that interest rates aren’t the only thing that remains at a historically low level – general knowledge on financial connections and interrelations is similarly underdeveloped, as was clearly shown in a recent study conducted by the insurance group Allianz. About a quarter of respondents were unable to say, for example, if after a year of 2% inflation and 1% interest rates, one’s money would be worth less, more, or the same.
The roughly 1000 respondents from 10 European countries were significantly more uncertain when it came to the relationship between risk and return or the importance of a diversified portfolio. Even more disturbing is the fact that only about 20% have calculated the amount of money they will need when they go into retirement, with women and young people giving the subject less thought than their older, male counterparts.
It is therefore a real threat that, with inflation on the rise and interest rates remaining at a constant low, a lot of money sitting in Austrians’ savings accounts will go to waste. This would not have to be the case if knowledge on financial and economic contexts held a higher priority in education policy – or if financial advisors were to provide their customers with transparent and comprehensive advice.