How do young people really feel about their financial futures?
The importance of Financial Literacy - Q&A with AGF
To celebrate Financial Literacy Month, we spoke to AGF’s Chief Executive Officer and Chief Investment Officer, Kevin McCreadie, about the importance of providing students with a solid grounding in personal finance to help them make sound financial decisions now and into the future.
What does ‘Financial Literacy’ mean?
“Education is one of AGF’s key pillars of social responsibility, and within it a focus on financial literacy. I’m a big believer in the importance of financial literacy – helping people make smarter choices, build better habits and make more informed investment decisions by empowering them with knowledge. I believe strongly that education is critical to helping people reach their financial goals.
Ideally, the seeds of financial literacy are planted early in life. In my household, we’ve always made a point to talk to our kids about money. As the CEO and CIO of a global asset management firm, talking about money and investing – even at home – comes with the territory.
A solid grounding in the basics of personal finance is at the crux of understanding so many of the general issues that affect everyone’s ordinary financial life – whether it’s instilling a culture of savings to buy a house, building up a retirement nest egg, paying off debt or understanding the value of professional advice.
Being able to thrive – and not just survive – provides people with a sense of empowerment and self-sufficiency, helping them achieve their personal goals.”
What key skills come with being ‘financially literate’ and how is the organization helping young people learn these skills?
“A few key skills learned along the path to financial literacy include setting and sticking to a budget, saving and starting an emergency fund, understanding how to use a credit card, protecting your identity and even the basics of investing.
I believe young people need to be introduced to investing, to make informed decisions about contributing to their workplace RSP or pension plan.
Financial literacy should be viewed as a basic life skill, right up there with reading and writing, general fix-it knowhow and learning how to swim.
It’s about ensuring you are given the correct change at the store, understanding what it means to only make minimum payment on a credit card and knowing the risks and benefits of locking into a long-term mortgage.
As a global asset manager, our employees understand finance and have a skillset that can be shared with the next generation of investors. Each year, we welcome students to our boardroom and share our experiences – both personal and professional – to help teach them about the importance of financial education.
We also have a unique opportunity to introduce them to the financial services industry and discuss career paths within our sector.”
How can students’ financial choices positively impact their future dreams and career choices?
“When a student has an understanding of basic concepts in finance they are empowered to make sound financial decisions. This is something I’ve seen with my own sons.
When students have the skills and knowledge to make informed decisions about managing money, they can put a realistic plan in place to pursue their dreams – whether it be saving to pay for their education, or life experiences like travelling, or eventually to buy a home.
It also helps young Canadians understand the importance of establishing and maintaining good credit, which is critical since it affects everything from getting a cell phone to obtaining approval for a credit card, loan or mortgage, even their ability to get a job.”
What are the top one or two lessons AGF and JA Central Ontario seek to teach young people about financial literacy?
“We believe that the keys to success when it comes to financial literacy are early intervention and lifelong learning.
Teaching young people about financial literacy at an early age sets them up to be confident and capable when it comes to money. There are many opportunities in everyday life to incorporate examples and learn about finances.
It’s a gradual process and as they get older, they can be introduced to more complex concepts and given more practical tasks to develop their money management skills.”
What lessons have you taught your own children about money?
“Now that my children are getting older (one is in university while the other is in high school) I’ve set up accounts that I use to help teach them a few basics about money. The main lessons I hope to impart are the fundamentals of saving and investing, and the importance of giving back.
I also aim to constantly drive home with my kids is the importance of taking a disciplined approach. Too often, savers can be tempted to spend impulsively while investors can be tempted to overreact to the latest news.
When saving, discipline means ensuring you commit to socking away part of every paycheque or allowance and giving it sufficient time to grow. When it comes to investing, discipline means having a clear understanding of your objective, risk tolerance and time horizon, and selecting investments that clearly fit within that framework. It also means fighting the emotional urge to panic-sell after losses or negative headlines and instead recognizing these dips as potential buying opportunities. After all, we get excited when our favourite jeans or sneakers go on sale. But for some reason, when share prices fall and companies are “on sale”, we tend to shun stocks.
When it comes to selecting investments, I challenge my children to research potential investments and discuss them with me. I’ll ask them questions to verify their understanding of the company or strategy and press them on the alternatives they’ve considered.”
Why does AGF partner with JA Central Ontario?
“AGF has a long-standing partnership with JA Central Ontario supporting financial literacy programs that have brought AGF employees into Ontario classrooms and GTA students into our downtown board room to learn about “Economics for Success”. This program emphasizes the advantages of staying in school and how this choice can positively impact their future. Students map their interests to possible careers and begin to learn the ins and outs of budgeting in preparation for the financial reality of post-secondary life.
We are also using our financial expertise to participate in JA Central Ontario’s “Investment Strategies Program” (ISP) next year. This six-week online competition uses live stock market data to teach students key investing principles, including learning how to research and select investments, and manage an online stock portfolio. This prepares them to make savvy investment choices throughout their lives, better preparing them for their future.
Ultimately, we want the next generation of investors to have the confidence to make informed financial decisions and take an active role in the direction of their personal financial futures.
And to help make this happen, AGF will continue to support educational initiatives aimed at strengthening the financial literacy of all Canadians.”
About JA Central Ontario
Through the delivery of hands-on, blended learning in entrepreneurship, financial literacy and work readiness, JA Central Ontario empowers young people to grow their entrepreneurial ideas, hone their work skills, manage their earnings, and secure better lives for themselves, their families, and their communities. Since 1968, schools in Central Ontario have relied on JA to prepare young people for success in an ever-changing global economy.
JA Central Ontario is a member of JA Canada and part of JA Worldwide, the world’s largest not-for-profit organization dedicated to educating young people about business.
As an independent and diversified global asset management firm, AGF brings a disciplined approach to delivering excellence in investment management and to providing an exceptional client experience.
Being an independent firm has allowed us to make strategic acquisitions that improve our client service experience and enable us to offer new and innovative products, while enhancing our research capabilities.
Our suite of diverse investment solutions extends globally to a wide range of clients, from individual investors and financial advisors to institutions, including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
The commentaries contained herein are provided as a general source of information based on information available as of November 12, 2020 and should not be considered as investment advice or an offer or solicitations to buy and/or sell securities. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Investors are expected to obtain professional investment advice.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
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