By Brian Uringi
Many Ugandans lack the tools to be confident enough in their ability to protect their money; this is a genuine discrepancy that comes from the failure to understand money. As the world evolves so does technology. The world is becoming a global village, meaning we have to keep up with the trends. Therefore, it would be wise to choose the appropriate insurance, understanding rights and responsibilities and recognizing a scam or an investment scheme that seems too good to be true. Even, fewer are confident in their ability to invest and many wouldn’t take key considerations into account when making an investment decision so, they may for the lack of a better word rightfully be more vulnerable to scams than they think. Protecting money means protecting people, their assets and income for security and peace of mind.
Insurance is an important part of protecting money. By insuring appropriately, people are buying some of the protection they need. Buying appropriate insurance means knowing what to insure and how much to insure it for, identifying the most suitable insurance product and getting the best value for money. Like other financial products, the key is to understand the insurance: what it covers, how much it costs and whether it suits individual needs. For instance, since people in business are not entitled to government employee benefits like pensions, gratuity and so forth therefore a life insurance plan is a viable method of protecting ones money. But there’s more to protecting money than buying insurance. Buying a financial product or service brings rights such as being given information on which to make an informed choice and having privacy respected. It also brings responsibilities such as giving honest and accurate information to the product or service provider.
For any type of investment, it is important to understand the risk as well as the return, to spread the risk by not putting all your eggs in one basket and to assure the quality of the information on which the investment decision is based. If people do fall for a scam, they are unlikely to recover their money. Being able to accurately assess the information and advice on which an investment decision is based is the best way of ensuring that investments, and the security they provide, are protected. If it seems too good to be true, then it probably is.
As a business person one needs to arm themselves with the tools to be confident in their ability to protect their money by choosing appropriate insurance, understanding your rights and responsibilities is the first step before you dive into any investment and secondly, do not be too fast to part ways with your money, being able to recognize a scam or an investment scheme that seems too good to be true is a skill that one must develop through doing the right research. Of these three measures, most people because ignorance is bliss are most confident in their ability to recognize a scam or an investment scheme that seems too good to be true.
However, the knowledge and skills required to recognize a scam are the same as for investing and compared to areas like budgeting, saving, dealing with credit and managing debt, it is up to you to be inspired and get out of the category of the ignorant category unless you are comfortable of course but that does not mean what you are doing is right. Global statistics show that most people have the ability to invest in educating themselves on how to protect their money.
Additionally, according to a research by the Australian government in 2005, people in Australia said that they had relatively low levels of recognizing some of the important aspects of investing which are also key to recognizing scams and investment schemes that seem too good to be true, such as consideration of both risk and return. This may indicate that their self-reported ability to recognize scams is overstated and as a result, they are more vulnerable to scams than they realize. This assessment is true globally in this context especially to Ugandans.
The truth of the matter is that most us Ugandans are not holding any type of insurance or believe in taking out insurance to be prepared for the unexpected. Even the ones who take out insurance for their cars mostly for example, do not understand their rights and obligations or the obligations the insurance companies owe them. With the increasing age and household income, business people should generally be more knowledgeable and confident about protecting their money. On paper, insurance companies are inclined to believe that insurance holding increases with household income. If that is a fact to consider, then, the recognition of the importance of learning more about recognizing a scam generally increases with household income as well. Only Ugandan based insurance companies can give true validity to this claim.
The aforementioned Australian government research states that females are more likely than males to believe in taking out insurance to be prepared for the unexpected technically it would be logical to rely on our Ugandan women to use their instincts to drive us men to protect our money more. The key aspects in relation to investing are relevant to one’s informed views about protecting their money: recognition of the importance of learning more about investing, considering both risk and return when making an investment decision; and that the majority of investment, despite a relative lack of confidence in their ability in this area. It is therefore mandatory to learn more about investing and recognizing a scam.
However, there is almost no gap between ability and understanding; and recognition of the importance of learning more about investing, whereas there is a significant importance to reduce one’s gap between these two measures in relation to recognizing scams. If you don’t, then technically all you will be doing is indicating that your overall level of confidence in recognizing scams is higher than that for investing.
This is a discrepancy that will need utmost addressing. Combined with relatively low levels of recognition of some important aspects of investing, which are also key to recognizing scams, overall levels of confidence in recognizing scams may not be well founded. This may in turn, indicate a higher degree of vulnerability to scams. The issue of confidence, as measured by the gap between ability and understanding, comes down to holding insurance is positively related to household income and knowledge of understanding money.
Collecting and understanding information is essential to good money management, and sometimes it’s important to get help.
Information and advice are often thought of in relation to investment and taxation issues, but they can relate to anything from doing a budget to getting debt under control and understanding rights and responsibilities. Information can be general or specific to individual needs, and it can come from a variety of sources. Family and friends are often seen as trusted and reliable sources of information, and a wide variety of information is readily available through television, radio, newspapers, magazines and the Internet.
Information and advice tailored to individual needs can also come from a variety of sources including financial counselors, accountants, banks, financial planners and government services.
People are also provided with information as part of buying a financial product or service. This includes information about the product or service, financial statements, policy documents, Product Disclosure Statements and Financial Services Guides which everyone should be cautious information about such institutions is also readily available at the Bank of Uganda. As consumers of financial products and services, people are ultimately responsible for understanding the information they collect or are given, particularly if it is being used to make a big decision.
Part of this is knowing when to ask questions and seek assistance, when to act on this knowledge, and when to conclude that they don’t have enough information or understanding to make a decision. Therefore, the proportion of business people taking out insurance to be prepared for the unexpected should be on the rise if we want to secure our future. People should therefore be more likely to believe in taking out insurance, as household income increases, and females are more likely to hold this view than males.
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