Personal finance test shows we're dunces compared to the Germans
WE are dunces when it comes to personal finance compared to the Germans.
A survey that asked three questions about interest rates and inflation found that a majority of Germans could provide the correct answers, but only a third of Irish people got it right.
The results of the survey have prompted calls for a greater level of financial education in schools.
Germany is seen as holding the purse strings of the eurozone, while Ireland has had to take out the begging bowl and appeal for a bailout, paid for mainly by Germany.
Yesterday, Germany again demonstrated what an economic powerhouse it is by dodging recession even though the rest of the eurozone is in the doldrums.
The German economy grew by 0.5pc in the first three months of this year, its federal statistics office said.
And the new research shows that Germans have a deep understanding of economics and personal finance.
More Germans than Irish were able to tell that someone who gets interest of 1pc on their savings, but suffers inflation of 2pc would be worse off after a year, according to market research by RedC.
The Irish Association of Pensions Funds (IAPF), which commissioned the research, said the results showed clear gaps in the public's understanding of basic personal finance.
Jerry Moriarty, of the IAPF, said: "The findings of the survey signal a need for further education of key personal finance issues on a national basis."
The only consolation for Irish people is that Americans and the Japanese had slightly poorer results in the survey.
One of the questions asked was whether it would be safer to buy the shares of just one company or a collection of company shares in a unitised fund.
The other question asked if someone who deposited €100 in a bank for five years, paying an interest rate of 2pc, would have more or less than €102 after the five years.
The results showed that 69pc of Irish people got this right when they said there would be more than €102 after five years, but 82pc of Germans were correct. Even more Dutch people knew the right answer.
Mr Moriarty said consumers have a good understanding of mortgages in this country, but when it comes to how inflation and interest rates impact on the likes of investments in pensions they are a little more hazy.
The survey also found that Irish men appear to be more financially literate than females.
"Our research tells us that older Irish males are most financially literate in the case of interest rates and inflation, but least financially literate in the case of risk diversification.
"That's unfortunate when you consider that older people typically have large pensions or lump sums to invest and really need to understand the choices they are making. This trend was also experienced in the international research," Mr Moriarty said.