November 3, 2024

Personal Economic Consulting

Smart Investment, Bright Future

CySEC stresses importance of financial education during childhood

CySEC stresses importance of financial education during childhood

CySEC officer Elena Karkoti this week released an article highlighting the importance of financial education from an early age, as part of the Cyprus Securities and Exchange Commission’s (CySEC) contribution to Global Investor Week 2024.

The initiative, led by the International Organisation of Securities Commissions (IOSCO), aims to promote financial literacy and protect both the public and investors.

In her article, Karkoti emphasised the critical role parents and carers play in shaping children’s financial habits and the growing risks posed by unqualified financial influencers, or “finfluencers,” on social media.

Karkoti addressed two key areas of focus in this year’s campaign: the dangers posed by finfluencers and the vital role of childhood financial education.

She raised concerns over the influence of finfluencers, explaining that these individuals, often celebrities or social media personalities, offer financial advice without the necessary qualifications.

According to Karkoti, this can lead to dangerous financial decisions by unsuspecting investors.

Many finfluencers gain a huge following without having the required professional qualifications or being licensed to provide financial advice,” Karkoti wrote.

“CySEC has identified specific cases where misleading information or inappropriate advice was given, and has found that a significant proportion of investors are being lured in by these promotions,” she added.

Moreover, she said that a recent study conducted by CySEC revealed that 31 per cent of respondents had made at least one investment based on advice from a influencer.

Furthermore, 26 per cent of participants admitted they invested more money than they could afford to lose.

To combat the rising risks posed by such individuals, CySEC has published an informative guide on its website, advising the public to be cautious when making investment decisions based on online advice. Karkoti urged investors to take a more proactive role in protecting their financial well-being.

“CySEC’s guide specifies ways for investors to protect themselves from possible fraud. This includes advice to only invest in assets they fully understand and make sure they have thoroughly researched each investment by seeking information from different sources,” Karkoti said.

“They must always keep in mind that if something seems too good to be true, then it most likely is. Investors should be cautious of promises of fast and high returns, and be suspicious if they are being pushed to make an investment decision in a hurry,” she added.

What is more, Karkoti underscored the importance of starting financial education in childhood, stressing that parents and carers play a key role in laying the foundation for responsible financial behaviour.

“Childhood and adolescence are key when it comes to forming financial behaviours, with parents essentially providing the first ‘lessons’ in money management,” she said.

She mentioned that “from an early age, parents’ ultimate goal should be to instil a mindset in their children that values ​​responsible spending, financial planning for the future, and generosity”.

“The first thing parents should keep in mind is that children learn a lot by observing,” Karkoti said.

“If parents demonstrate good financial habits, such as budgeting, adequate and regular saving, and responsible spending, children are much more likely to adopt these practices as well,” she added.

Karkoti also reiterated CySEC’s commitment to advancing financial education through its ongoing initiatives.

“The financial education of the public and investors is a strategic priority for CySEC and its initiatives are ongoing and cover a broad range of topics and audiences,” she said.

She noted that the commission maintains a financial education hub on its website that “contains a wealth of educational material, conducts its own awareness campaigns on current issues # and distributes warnings to the public when it identifies new risks”.

“CySEC staff also give speeches and presentations at conferences and discussions, and the commission participates in and organises events where it advocates for financial education,” she concluded.

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