PERSONAL FINANCE COURSEWORK
KAUNAS, 2013
TABLE OF CONTENTS
TABLE OF CONTENTS 1
INTRODUCTION 2
1.RELATION BETWEEN HOUSEHOLDS PARTICIPATION IN STOCK MARKET AND PERSONAL FINANCIAL ADVISOR INSTITUTION 4
2.PERSONAL FINANCIAL ADVISORS INSTITUTION IN UK AND LITHUANIA 6
3.HOUSEHOLDS INVESTMENT SITUATION IN UK AND LITHUANIA 8
CONCLUSIONS 9
LIST OF REFERENCES 10
INTRODUCTION
There are significant differences among the countries in terms of households proportion which invest directly or indirectly in the stock market. For example, in the US and Sweden about 50% of households participate in stock market, while it makes about one third in UK and between 15%-25% in the Netherlands, Italy, France1. The situation differs dramatically in the Baltic States. According to the research that was carried out in 2011 by the Institute of Personal Finances of Swedbank, only 3% or even less of households in the Baltic States tend to invest in securities or mutual funds.2
Reasons for households of not participating in the stock market that are being stressed in the papers examining the subject might be grouped into internal (e.g. psychological, financial) and external (regulatory, economic, socio-demographic, etc.) factors.
Some internal factors that are repeated throughout the papers:
1. Low income, which means that marginal propensity to consume is rather high and only small part or no at all is put aside for saving or investment;
2. Lack of financial literacy or education in general. Papers stress that there is correlation between education and participation in stock market of households: the more educated is the population the larger the proportion of it that invest in stocks;
3. Influence of life cycle and financial goals. Jurevičienė and Klimavičienė reveal that life cycle determines investment decisions – the longer is the investment horizon, the riskier are the investments into
References: Lietuvos Respublikos Draudimo įstatymas, Nr. IX-1737, 2003 m. rugsėjo 18 d. Nepriklausomų finansų patarėjų institutas Lietuvoje ir užsienio šalyse, LR Vertybinių popierių komisija, 2009 m Personal fInances and accession of them into Lithuanian market, in Integration of Financial Sectors of Baltic States into European Unijon: Challenge and Experience, Bikas E., Jurevičienė D., 2004 m., p. 191 – 208. Swedbank Asmeninių finansų institutas, ,,Baltijos šalių gyventojų taupymo elgsenos tyrimas“, 2011, http://www.investopedia.com/terms/p/personal-financial-advisor.asp