Everyone has the right to invest in financial markets

December 23, 2021
Everyone has the right to invest in financial markets

The world today is full of aspirational minds. People are looking to pursue their financial ambition and create a more secure life for themselves and their loved ones. Achieving financial freedom is treasured by the masses yet attained by few. However, every person has a right to participate in the financial markets and, in the process, equalize the wealth opportunity.

Most people in the Middle East are missing out today because the financial system wasn’t traditionally designed to serve everyone in an equitable manner. For example, large institutions, family offices, and ultra-high net worth individuals are well catered to by banks and financial institutions, whereas ordinary individuals are often neglected.

Similarly, many wishing to trade and invest are overlooked, particularly women. Research has found that 75 percent of women feel misunderstood by finance professionals, which likely stems from two things: a resounding failure to understand or appreciate their aspirations, and the flawed stereotype of women not being as performance-focused as men.

With the above in mind, this leads to an obvious question: What is needed to ensure everyone has an equal footing?

A roadmap to financial inclusivity

For starters, the answer to this question begins with true inclusivity, no matter a person’s financial status, education level, age, or gender. Widespread participation in the financial markets can only happen in a frictionless market environment where access is simple, affordable, comprehensive, and culturally sensitive. Through technology and financial innovation, we have an opportunity to encourage and foster financial participation, do right by the ordinary investor, and expand ownership of equities and all other asset classes to a greater part of the MENA population.

Secondly, true inclusivity can only work in tandem with financial literacy. Making financial knowledge simple and accessible is one of the best ways to support this change. Unfortunately, financial literacy – or a lack of it – is not only a problem in the MENA but also the world at large. Research has found that approximately 33 percent of adults globally are financially literate. That means that about two-thirds of the world population are not yet familiar with financial concepts or lack the appropriate knowledge to invest in the financial markets.

Albert Einstein once said, “Compound interest is the eighth wonder of the world.” This idea works to your advantage if you can generate positive returns over the long run. But it works to your disadvantage if you don’t participate in the financial markets or if you take significant risks leading to permanent losses.

People are often drawn to investing in opportunities that deliver high returns. Unbeknown to them, these returns are usually unsustainable. They fail to understand the risks involved, which typically end up in financial loss. These losses could easily be avoided through online education about the financial markets and the way they work.

An online trading platform for all

Many ordinary investors in the region did not get the chance to participate in the extraordinary performance of the US markets over the last 18 months. Neither did they take advantage of the recent run-up of the Saudi stock exchange, Tadawul, which just reached its highest point since January 2008.

Today, the Middle East is at a crossroads where the unique combination of education, rapid digitization, and financial innovation will enable us to equalize the wealth opportunity for all. The online trading revolution has long started in other parts of the world. It is time for the Middle East to catch up.

Karim Farra and Ziad Aboujeb are co-founders of Amana Capital

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