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  • Writer's pictureDemos Kyprianou

Financial literacy for Kids!

This recent article in the National on financial education caught my attention:

I'm a firm advocate for financial education/literacy, especially in young students. However, when it's tied up with a well-known commercial insurance entity, I'm 'slightly' skeptical of the motive. There's an interesting case study in Australia where a bank teamed up with many school for decades, starting with children as young as 3-4 years old, to reap benefits down the track, under the guise of financial education!

Although well intended, trying to teach students investing via a 'stock market game' does more harm than good. Kids that lose end up thinking the market is too hard and should be avoided while kids that do well/win often end up mistaking 'luck' for 'skill' and think it's all very easy to make money via trading - leading to higher risk taking, frequent trading and constant speculating when they eventual invest their savings. We know how this story ends!

Chris Brycki, (founder of Stockpot - the Australian robo advisor) famously won the ASX share game an incredibly 3x as a student! He had a simple strategy - pick the 10 most speculative/volatile companies from the list given and pray!

Because gain/losses are not normally distributed (it's right tailed), all he needed was 1 or two to do well within the short period to win the competition (most of the other kids would pick big, well-known companies etc so hovered around the same value as general market.

Years later, he acknowledged that the wins were really mostly luck and the competition teaches and encourages the OPPOSITE of sound investing principles! Our friend Andrew Hallam share the same concerns as us on this topic with this post back in 2012!

Teachers and parents, if you are keen to teach children financial literacy, I have struck gold big time coming across the Minority Mindset who have developed a COMPLETE program for kids from kindergarten to Yr12 and the amazing thing - they were making it all avail for free!

It is very good - complete with class lessons, exercises and answers. There's a US bias which can be modified to become more 'international'. If any teachers/principal interested in developing such a program at their school, some experienced members of the group may be able to help out.

K to G2: Lessons

Grade 3-5: Lessons & workbook

Grade 6-8: Lessons & workbook

Grade 9-12: Lessons

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