Definition of Financial Education – Part 2
Organization for Economic Co-operation and Development (OECD) has defined
financial education as “the process by which financial consumers/investors improve their understanding of financial products, concepts and risks, and through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks
and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being”.
What are the financial products?
Financial products refer to those instruments that: –
- help you save, (Saving Bank Account, Term Deposits, Mutual Funds, Post Office Term Deposits, Unit-Linked Insurance Policies)
- invest, (Saving Bank Account, Term Deposits, Mutual Funds, Post Office Term Deposits, Unit-Linked Insurance Policies)
- get insurance or (Term Policy, Life Policy, Pension Policy)
- get a mortgage.
Of course, the financial products cannot be strictly categorized under Saving Plan or Investment Plan. Normally, they are a combination of two or three concepts.
These are issued by:-
- various banks,
- financial institutions,
- stock brokerages,
- insurance providers,
- credit card agencies
- and government sponsored entities.
Financial products are categorized in terms: –
- of their type
- or underlying asset class,
- or volatility, (shares etc )
- or risk (shares, ULIP’s etc )
- and return (Low return-no risk, Medium return-medium return etc)