Financial Literacy : The importance of future orientation and financial literacy for the asset management of pension saving

Abstract

The purpose of this study is to find out whether financial knowledge, consideration of future consequences and risk attitude have an impact on portfolio choice.With today's inflation, it has never been as important to think about the future as before. Good financial knowledge is crucial to how individuals can meet the unexpected expenses. In order to make your own financial decisions, it is important to think about the future. Developments in the financial market and in welfare schemes allow consumers to make an increasing number of major financial decisions in an increasingly complex financial market. It is important to make sure that everyone has the necessary knowledge to make good decisions that will be of the best for their own welfare.The study uses a survey with the target groups in the Netherlands. The sample consists of 834 men and 674 women, with an average age of 50 years. It has been found that those who are risk averse, do not necessarily hold risky investment. At the same time, we find that it does not matter whether someone is financially literate or not to own a portfolio consisting of savings account, mutual funds or even stocks. The outcome also proves that our target group is future oriented, regardless of which portfolios they have chosen to invest in. The trend shows that those with higher financial knowledge choose a savings account as an investment rather than mutual funds or stocks. Comparing men to women theaverage score shows a higher level of financial knowledge for men. When it comes to financial behaviour, the results show that the elderly prefer a risk-free investment.