Maltese rank 13 in financial knowledge, EU survey shows

Maltese have fared modestly in a recent Eurobarometer survey that assessed the financial knowledge of respondents in all EU member states.

Maltese emerged more knowledgeable than respondents in 14 other member states and less knowledgeable than respondents in 12 other member states.

In the survey 26% of Maltese respondents answered at least four out of five questions correctly compared to 25% of respondents in the entire EU.

A majority (54%) of Maltese respondents answered only two or three questions correctly, while 19% could not answer any questions correctly or managed to answer only one out of five.

The Maltese were far less knowledgeable than respondents in the Netherlands, Denmark, Finland and Estonia where about four in 10 respondents replied correctly to four out of five questions. The least knowledgeable were the Romanians (13%), the Portuguese (16%) and the Cypriots (19%)

In the survey respondents were presented with five financial knowledge questions.

74% of  Maltese respondents correctly replied  that an investment with a higher return is riskier, while 64% gave the correct response to the question about how inflation works. 58% of Maltese understood the value of diversification in investing and 43% answered  correctly when asked about compound interest. However, just 24% understood the link between interest rates and bond prices.

The question about bond prices turned out to be the trickiest question for respondents in all EU member states.

Respondents were asked: ‘If interest rates rise, what will typically happen to bond prices?’

Only 24% of Maltese respondents correctly replied that they will fall.  But the Maltese are not alone in their lack of knowledge on this aspect. Only 20% of all Europeans replied correctly.

The easiest question in the survey was one which asked respondents to state whether an investment with a higher return is likely to be riskier than one with a lower return or less risky than one with a lower return. Only 5% of Maltese respondents in comparison to 9% of all EU respondents incorrectly replied that this would be less risky.

58% of Maltese also correctly replied that an investment in a wide range of “company shares” is likely to be less risky than an investment in a single share.

Maltese rank fourth on financial behaviour

Apart from assessing the financial knowledge of respondents in different EU countries, the survey also shed some insight on their financial behaviour.

When it comes to questions related to financial  behaviour relating to choosing products, keeping track of expenses and striving to achieve financial goals, 71% of Maltese scored highly, placing fourth among all EU member states.  Curiously the Romanians who scored low in financial knowledge questions, scored the highest in these questions, with 82% registering a high score in common sense questions.

96% of Maltese agree that one should consider whether you  can afford something before you buy it.  A similar proportion of respondents  said that one should  keep track and monitor expenses and nearly eight in ten respondents agree that one should set  long-term financial goals and strive to achieve them.

The survey also awards an overall financial literacy score which combines financial knowledge and financial behaviour, giving both aspects equal weight.  In this aspect 20% of the Maltese were given a high score compared to 18% of all EU citizens.  Only 13% of Maltese were given a low score compared to 18% of all EU citizens.  In this regard Malta was ranked seventh among all 27 EU member states in a joint place with three other countries.

The  proportion with a high score varied between 11% in Portugal and Latvia to 27% in Denmark, Slovenia and Sweden, and 28% in the Netherlands. Across all Member States, more than 10% of respondents have a low score on overall financial literacy, with the highest proportions being observed in Finland (27%), Latvia (24%), Belgium (22%) and Spain (22%).

35% have enough saved to last more than six months

The survey also sheds light on saving patterns in different EU countries.

The survey shows 35% of the Maltese have enough savings to last six months or more without having to resort to taking loans if they lose their main income.

In contrast 10% have no savings at all, 9% have enough savings to last a week, 14% have enough savings to last between a month and three months and 16% have enough savings to last between three and six months.

The survey also shows that 23% of Maltese have a private pension while 25% have a life insurance.

The survey also shows that 48% are not confident that they will have enough money to live comfortably throughout retirement years compared to 54% of all EU respondents.