How do we deal with risks?


“Watch out!” is what we say when we are supposed to pay close attention. But our most important organ of perception is easily deceived in everyday life. How is this related to money? It is quite easy, actually: if we find ourselves browsing a glossy brochure at a bank and we skim the appealing graphics indicating constantly increasing profits, then we should not forget that that is an ingenious attempt of manipulation, a bait for our visual perception. There is also a reason why the consultant, who ensures us that the products bearing high interest are “virtually risk-free”, meets us in finest Italian garments.

Approaches like these intent to make us take risks – to someone else’s advantage – which are very unlike us and something we cannot assess correctly. But the majority of our assets is invested in the capital market.

Two factors that go hand in hand appear pivotal in the context of our money-related research: first of all, the topic of “Risks”, and secondly “Financial Literacy”.

Let us visualize how the acquisition of investment products works: a consultant analyzes how much money we want to invest, takes into account factors such as our risk appetite or the planned duration of investment, and thus ties up a package for us. And this all happens against the backdrop of his professional expertise. The situation is similar to when we visit the doctor’s office. The “demigod in white”, as they are colloquially referred to in German, sitting on the other side of his desk, asks about our symptoms and then presents his diagnosis including a treatment plan – unless he refers us to a specialist. Objections are not welcome and most of us refrain from uttering them anyway. In both cases, the consulting party has resigned to their fate and accepts the proposed decisions. But we have to realize: the diagnosis or risk analysis is based on the range of experience of the doctor or investment consultant. Our task is to critically call the results into question. After all, we are talking about two central topics of our lives: our health and our financial scope of action. But in order to do so, the corresponding knowledge must be available to us.

Regarding medicine, one would be ill-advised to disagree with the doctor based on internet research. If you want to be on the safe side, seeking a second or third opinion from other specialized doctors could be helpful. That is not how it works in the finance sector. The internet does offer an abundance of substantiated information. Acquiring a solid basic knowledge of finance has never been this easy. Said knowledge and the self-confident approach to the world of finance has been termed “Financial Literacy”. And it is indispensable if we want to assess whether or not a certain product matches us and our risk appetite. That is the only way we can question offers in regard to their plausibility and soundness. If we do not want slip and fall on the glossy floor of alluring marketing experts we have to educate ourselves to become “financially literate” people.

Therefore, the Sunflower Foundation wants to cooperate with people who can help us in becoming “financially literate”. This refers to every single person’s ability to bring in line two things in their life: our money and our risk appetite. Those who know enough about the instruments of investment can use them to their own advantage – and to everyone else’s advantage at best. If they can correctly evaluate their own character they will also find the appropriate investment strategy. And instead of focusing on an elegantly dressed consultant, they will regularly take a look at their portfolio information.


Signet Sunflower Foundation