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Finance 101: desis lead America
Indians can take prudent financial decisions and avert an economic crisis better than the Americans as financial literacy level in the world's largest democracy is higher than in the US, says a study.
Indians can take prudent financial decisions and avert an economic crisis better than the Americans as financial literacy level in the world's largest democracy is higher than in the US, says a study.
According to a study by economists at the Federal Reserve Bank of Chicago, majority of Indians (80 per cent) responded correctly to a financial literacy test, while only 60 per cent of respondents from the US gave right answers.
Most Americans do not understand the difference between compound and simple interest, the characteristics of financial assets such as stocks and bonds, the study noted.
“Many people do not understand basic financial concepts and products well enough to make sound short — and long-term financial decisions for themselves and their families,” the study said.
Indians are more conservative in borrowing, taking loans motly for buying a home or a car, while Americans maintain large outstanding balances on credit cards when cheaper credit is available.
US citizens fail to plan for retirement, reaching it with little or no savings as majority of those surveyed were unable to accurately report their Social Security or pension entitlements.
