The importance of education
Retirement Commissioner Colin Blair uses US research to show the power of education.
Wednesday, June 28th 2000, 12:00AM
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He told the Enterprise Education Conference in Auckland last week that education should be targeted at all socio-economic groups in society.
"From my observations over the last 5 years in this role and from experience gained from 40 years as a public accountant I am convinced that financial management ability does not have a particularly close relationship to income, educational qualifications or occupations," he says.
" I would say that some of the worst money managers are highly successful professionals in fields such as law, medicine and even accountancy and some of the best are lower income people who have to work hard to balance the family budget and provide for future requirements."
Research from the US National Bureau of Economic Research shows that people in the lowest income groups do move up income ladder.
Other research from the same organisation demonstrates that there can be huge differences in wealth accumulated by people who have enjoyed similar lifetime income levels.
It shows that people with a lifetime income of $740,000 (that's an annual income of about $20,000) have achieved totally different outcomes in terms of savings.
The best in the group accumulated about $440,000 while the bad savers had only $12,000 in savings.
Blair says another interesting result in this research was that a surprising percentage of top income earners saved nothing or very little.
"The choice of savings vehicle had some impact, but was only relatively minor," Blair says.
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