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Australia's first home buyers are clueless

In a survey of 1,000 Australians, ME Bank found:

“… first home buyers are clueless when it comes to knowing the ins and outs of property buying, with a concerning 61% of first home buyers failing a basic property buying literacy quiz, compared to only 27% of owner occupiers and a quarter of investors.” – ME Bank

Nearly 9/10 respondents didn’t know that LMI covers the bank and not them or there is no cooling off period at auction. Nearly 8/10 didn’t know a deposit was needed on auction day and 6/10 didn’t know what an offset account is.

And it wasn’t just would-be buyers.

Also read: Plummeting auction clearance rates pose huge threat to Aussie stock market

More than 6/10 owner occupiers and investors were unsure of the key things that contribute to higher interest. Meaning, they could be saving on interest.

Also read: Will falling house prices trigger the next Aussie recession?

ME Bank had some great tips for buyers: do some research, crunch the numbers and seek independent advice (e.g. from an accountant) to understand how things work.

Earn More, Keep Less?

Outside of property, the 2017 ASX Australian Investor Study showed less than 30% of us understood what the risk-reward trade-off means and even fewer know what diversification means.

I find these surveys concerning but also surprising because most of us spend 40 hours per week, plus travel, trying to earn a dollar — and we split 30% of our keep with the ATO.

But investing just a few hours in your financial literacy can literally pay dividends many times over for many years.

Yes, I’m a share market investor with years of experience. So that’s all well and good for me to say, right?

Also read: Top 10 Aussie suburbs in the last decade

But you needn’t go to university to study finance to save yourself or your family some serious money over many years.

All you need is a basic understanding of finance and motivation to learn. It seems like a daunting task, but it’s worth it.

It can be as simple as listening to a finance podcast, reading a book, subscribing to (and reading) a newsletter or getting advice on how to do it.

Think you know what you’re talking about?

If you’re game, why not try our share market basics quiz?

Click here to take the quiz (3 minutes)

Cheers to our financial futures!

Owen Raszkiewicz is Lead of Adviser of Rask Invest