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Financial Literacy for Non-Individual Investors - A game changer for earning on surplus working capital

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Financial Literacy for Non-Individual Investors - A game changer for earning on surplus working capital

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Financial literacy is one of the key ways to bridge the gap between wealth creation journey and economic growth. The absence of financial literacy will lack a strong foundation in terms of decisions concerning savings and investment for non-individual investors. Understanding what balance sheets and profit and loss statements represent gives a clear picture of the company's financial health and enables better decision making.

Financial Literacy for Non-Individual Investors - A game changer for earning on surplus working capital
Financial Literacy is monumentally more important than money itself. As defined by the Organisation for Economic Co-operation and Development (OECD), financial literacy is not only the knowledge and understanding of financial concepts and risks but also entails skills, motivation, and confidence to apply the knowledge and understanding to improve the financial well-being. It is a well-thought amalgamation of knowledge and behaviour that builds the skill for creating wealth. A lack of understanding of how finances flow in terms of credit, investments etc. form an ever-growing wealth gaps.
Financial literacy is one of the key ways to bridge the gap between wealth creation journey and economic growth. The absence of financial literacy will lack a strong foundation in terms of decisions concerning savings and investment for non-individual investors. A business owner that is financially savvy is more likely to have complete control over their company. Understanding what balance sheets and profit and loss statements represent gives a clear picture of the company's financial health and enables better decision making. A small business owner might not be able to holistically manage financial matters; however, having financial literacy will empower the entrepreneurs to handle part of the company's finances and monetising opportunities for developing a successful company and that’s what Elevo aims to do.
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The Delinquency
In a country with a barely 27 percent financially literate population, the first steps into the world of money should start with an increased focus on financial education. According to a global poll conducted by Standard & Poor's Financial Services LLC (S&P), India is home to 17.5 percent of the world's population, yet roughly 76 percent of its adult population lacks fundamental financial knowledge. In a study of the top 20 reasons why start-ups fail, a whopping 29 percent indicated simply running out of cash as the cause for their failure. Many of the businesses fail due to a lack of fundamental knowledge of financial services, ideas, banking processes, investments and risk-return management. According to an Intuit survey of the small company industry, a massive 40 percent of small business owners believe themselves to be financially illiterate. Financial literacy can help owners succeed in any area of business, and amplify decision-making, negotiation, and leadership skills.
Financial literacy can strengthen:
Recognising Opportunities
Business owners can track particular factors that affect the company's bottom line after comprehending their financial accounts. Insights into a company's financial accounting may be a motivating factor when applied to everyday commitments. Knowing how various activities affect the financial health of the business as a whole can help keep the larger picture in mind.
Better Decision Making
Financial literacy will provide business owners a new arsenal to handle challenges. When faced with business decisions, entrepreneurs can confidently analyse the alternatives and make the best decision for a company by considering the financial ramifications first. Financial literacy may help them become a better-rounded leader who analyses all sides of any problem. Furthermore, financial literacy will enable them to build a solid foundational understanding to forecast growth with highly accurate reportage.
Analysing Investment Choices
Investing help business in generating and growing wealth for the future. All small businesses need to grow profitably in order to succeed and the ability to scale a business in a profitable and sustainable way requires financial literacy. Financial knowledge will help professionals to understand the facets of their investments and maximise every rupee, dollar, euro or pound in the right way saving both time and money. To become financially literate, one must first understand about the fundamentals of investment. The core component of effective treasury management are: Interest rates,  diversification, liquidity which needs to be studied to ensure positive investments.
In my experience, though there is no scarcity of acumen and interest among non-individual investors to learn about financial literacy and monetise their capital, individuals are eager to know and expand their knowledge base. Where we fall short of is a robust mechanism to spread the awareness and right tools to get the fundamentals and principles of investing and financial literacy. Orchestrating a holistic ecosystem with readily available information and encouraging non-individual investors to step up their game to stay ahead the curve, will enable a smooth transition to a financially literate society.
(The author of this article is Shaily Shah, Co-founder of Tarrakki. She leads marketing and growth efforts for Tarrakki.)
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