FEAR OF FINANCE

The analogy between sex and money is as easy as it is appropriate, and it has been taken up once again this week by Claire Rayner, the well- known agony aunt, on behalf of the latest campaign to promote financial awareness among schoolchildren, launched this week by Autif, the Association of Unit Trusts and Investment Funds. (Call 0181-207 1361 for a free pack)

She sees kids in the Nineties "fumbling in the dark when it comes to managing their money", and there is little doubt that she is right. Market research regularly suggests that at least half the adult population does not know how to set about choosing a mortgage, almost half have never heard of a Tessa (tax-exempt special savings account) or a PEP (personal equity plan), which allows investors to hold shares free of both income tax on the dividends and capital gains on the profit when they sell.

Many punters by now know a company pension scheme which pays out a proportion of final salary is the best buy for long-term employees, the state earnings related pension is usually best for anyone over 45 years of age, and a personal pension is best for frequent movers, although employers are often reluctant to make a contribution, and many employees do not know whether their employers do or not.

But when it comes to choosing the best performing pension fund managers and the lowest level of charges most punters are still babes in arms, and the respective advantages of additional voluntary contributions, free standing or otherwise, are equally arcane mysteries. Don't take my word for it, the surveys all show a depressing combination of ignorance and/or modesty.

The evidence shows that less than a quarter of investors really knows how to value a corporate bond PEP, or where to sell an endowment policy which is surplus to requirements rather than meekly surrendering it to the insurance company, or how to borrow against the security of the policy, or exactly what the advantages and disadvantages of a "guaranteed" bond are.

Fewer still know the attractions of an off-shore roll-up fund, or an income share in a split-level investment trust, or where and how to buy travel insurance or holiday money.

When it comes to borrowing the level of ignorance is equally high. No one can be absolutely sure whether interest rates are going to rise or fall over a given period of time. But many borrowers still do not know how to set about getting a discount or a cashback without actually moving house, or whether to take out a personal loan or get credit from the dealer or retailer who sells them their next car or washing machine, how to choose the credit card which best suits their financial circumstances or the relative advantages of borrowing or leasing a new or second-hand car.

Yet any, and arguably all, of these things are important if not essential to a full and financially comfortable life. New issues like the need for mortgage protection insurance have become essential knowledge although less than 15 per cent of homebuyers actually have any protection while they wait to qualify for help from the state. The way things are going, private medical insurance and long-term care insurance to pay for residential care when we are old will be essential items of the curriculum within a very few years.