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• The average financial literacy score of the students surveyed is 12.7 out of 21, highlighting a clear demand for tertiary educational institutions to provide more financial literacy programmes to meet the needs of their students.

• Students studying a business-related subject (i.e., accounting, finance, economics, actuary, and business administration) have a higher financial literacy score than those studying non-business-related subjects (13.1 compared to 12.5). However, whilst a business-related subject increases the student’s financial knowledge, it does not translate to actual changes in attitude or behaviour. 

• Only a small proportion of tertiary students feel they have enough knowledge about investment products (e.g. stocks, funds, and bonds).

• 69.0% of student investors rely on their own analysis when making investment decisions.

• The top five sources students use to obtain investment-related information are YouTube (39.3%), friends and family (35.5%), television (32.5%), financial websites (31.3%), and investment applications (19.7%).

• Policy recommendations: Increase regulation on the provision of investment advice on social media platforms, tertiary educational institutions should provide more financial literacy training, launch a Youth Bond only available to young people and raise age limit for access to credit facilities.

There are many investment products in the market, which one is suitable for you? How does one take the first steps in financial management, in order to avoid the pitfalls and accumulate wealth? These may be the questions from many novice investors. According to Investor and Financial Education Council’s (IFEC) 2021 Financial Literacy and Competency Study, 22% of students aged 18 and above held investment products, a significant increase from 2% in 2019. Nevertheless, there is still a lack of research and analysis on their financial capability and investment patterns, which is not conducive to stakeholders seeking to help young people develop a proper attitude towards investment.

In order to understand the financial management ability and investment pattern of Hong Kong’s tertiary students, MWYO distributed a survey through eight tertiary institutions between August and November last year to their students to further analyse their investment mindset. A total of 1,682 completed responses (including 711 university students and 971 non-university tertiary students) were collected and the research report is released today (15th December). Meanwhile, MWYO has also organised financial management workshops with Child Financial Education in various tertiary institutions this year to answer students’ investment questions, and will share its observations and insights later on.

Financial literacy of tertiary students is low

The average financial literacy score of the students surveyed is 12.7 out of 21. A financial literacy score can be divided into three components: financial knowledge, financial behaviour, and financial attitude. A higher score in these components reflects better financial knowledge, a more responsible approach to managing day-to-day finances, and a higher willingness to plan long-term financially.

Students studying a business-related subject (i.e., accounting, finance, economics, actuary, and business administration) have a higher financial literacy score than those studying non-business-related subjects (13.1 compared to 12.5), though this is predominantly due to the fact that they have better financial knowledge: their financial behaviour and attitude scores do not differ significantly. This suggests that whilst a business-related subject increases the student’s financial knowledge, it does not translate to actual changes in attitude or behaviour. 

In this survey, only 27.1% of surveyed students currently hold an investment financial product. The average number of investment product these student investors hold is 1.5, showing that they are only making tentative steps into investment and do not yet have a well-diversified portfolio.

Student do not feel they have enough knowledge about investment products

Only a small proportion of tertiary students surveyed feel they have enough knowledge about investment products. The product that the highest proportion of students surveyed feels that they already know enough about is cryptocurrencies and non-fungible tokens (NFTs), with 5.7% of students surveyed feeling that they already have enough knowledge about the product. This is probably a result of the incessant news coverage and advertising about the product over the past few years. The products students are most interested in learning more about are stocks, funds, and bonds (72.4%, 65.8%, and 62.0% of students surveyed want to learn more about these products respectively), reflecting the fact that these traditional products are probably regarded by students as the starting point for investing and therefore most relevant to them.

Student investors rely on their own judgement when making investment decisions

Student investors most commonly rely on their own analysis (69.0%), financial news (59.6%) and advice from friends and family (43.7%) when making investment decisions. This suggests that students are confident in their financial analytical skills and ability to distil useful information from the news.

Students prefer visual sources of investment information

The top five sources students use to obtain investment-related information are YouTube (39.3%), friends and family (35.5%), television (32.5%), financial websites (31.3%), and investment applications (19.7%). There appears to be a clear preference for visual information sources, suggesting that students prefer to learn about investing through videos over text because it is a more engaging format. With YouTube videos in particular, the on-demand nature of these sources may also make them more attractive, as students can consult them whenever they wish to. Another possible explanation for this preference for unspecialised sources of investment information is that many sources that offer more in-depth financial analysis (e.g., Bloomberg, bank insights for high-net-worth customers) are often locked behind paywalls and therefore unobtainable for students who may be unable or unwilling to pay for such access, especially since they are likely to have a small investment portfolio that makes it difficult to justify the outlay for only very marginal gains.

Policy Recommendations:

Following a thorough analysis of the survey data collected, we have developed the following four policy recommendations that will allow tertiary students in Hong Kong to invest in an informed and orderly manner:

1. Increase regulation on the provision of investment advice on social media platforms

This study found that 58.9% of the students interviewed receive investment-related information from at least one social media platform, which demonstrates the influence of these channels on tertiary students’ investment perceptions and decisions. There is no provision under the existing regulatory framework that controls the accuracy of opinions on investment products expressed by non-Securities and Futures Ordinance licensees on social media platforms. In view of this, we propose that the Securities and Futures Commission may make reference to the practices in Mainland China, Australia, the United Kingdom and the European Union to strengthen the regulation of opinions on investment products expressed on social media, including how they are defined and what parties are subjected to regulation.

2. Tertiary educational institutions should provide more financial literacy training

As tertiary institutions have a lot of resources and can reach a large number of students, we believe that the most effective way to enhance students’ financial capability is for them to provide more financial education courses on campus. In designing the relevant courses, consideration can be given to including a simulated investment session so that students can understand more directly the risks and returns of different investment products.

3. Launch a youth bond only available to young people

This study found that student investors have a lower risk capacity and emphasise long-term returns rather than short-term profits from investment, so bonds may be a more suitable investment product for them. Therefore, we suggest that the Government can make reference to the silver bond and issue a youth bond for young people under the age of 30 to subscribe. Each lot should be HK$1,000 so that more young people can afford it.

4. Raise age limit for access to credit facilities

In this study, 41.7% of the respondents hold credit cards, reflecting that a sizeable portion of tertiary students have entered the credit market. We suggest that the Government and the banking sector should make reference to the practice of the United States and individual banks in Hong Kong and raise the age limit for applying for credit cards and personal loans to 21, so as to minimise the situation where tertiary students start to accumulate debts before they have a stable income.

“For young people, investment is an important way to grow their wealth and provide an additional source of income,” said Mr. Angus Chan, researcher of MWYO. “There is a clear need for more resources to be devoted into making sure that tertiary students have a better understanding of the risks and rewards of different investment products and how to choose the right products to suit their financial targets. We look forward to the formulation of better investment regulation, more suitable investment products (e.g., Youth Bond), and more comprehensive educational programmes that can protect young investors as they begin to enter the market.”