The Impact Of Financial Literacy On The Effectiveness Of Urban Household Asset Portfolio

With the gradual progress of reform and opening up in China,the economy has achieved high-quality and high-speed development in recent years.The pace of urbanization has not stopped,urban families have become rich,and the financial market has become prosperous.The effectiveness of asset portfolio not only encourages family investors to allocate family assets rationally,but also has great significance for economic and social development and the prosperity of financial management market.As a human capital,financial literacy can not only represent the level of financial knowledge,but also fully reflect the ability of individuals to use basic knowledge to achieve financial security.Under the background of the new asset management regulations and national financial management,exploring the impact of financial literacy on the effectiveness of household portfolio not only enriches relevant theories,but also has great significance for household investors and policy makers in practice.This paper combs the research of domestic and foreign scholars on the issue of financial literacy,summarizes the existing conclusions and focus of the current research,and can preliminarily judge the positive role of financial literacy in promoting the effectiveness of asset portfolio,but the corresponding mechanism verification is still missing.Then,it analyzes the influence of financial literacy of family investors on financial behavior through relevant theories,and explains the influence of financial literacy on the effectiveness of asset portfolio by influencing the return and risk of asset portfolio.Finally,based on the survey data of China Family Finance Research Center of Southwestern University of Finance and Economics in 2019,this paper constructs a financial literacy index using factor analysis method,and uses Sharpe ratio to perform an exponential substitution for asset portfolio effectiveness.Then the empirical model regression shows that the improvement of financial literacy level is conducive to enhancing the portfolio effectiveness.Then the author makes a heterogeneity analysis,which shows that the promotion of financial literacy on the effectiveness of asset portfolio is significant in families with different income levels and different levels of education.The article also empirically discusses the mechanism logic behind this phenomenon,using financial market participation as an indicator to analyze how financial literacy affects portfolio income,and family portfolio diversity as an indicator to analyze how financial literacy affects portfolio risk.Finally,the author summarizes your above research and believes that the overall financial literacy level of family investors in China is low,and the effectiveness of family asset portfolio needs to be improved.Aiming at the above phenomenon,this paper puts forward the following suggestions from the perspective of government and the family investors: First,government agencies should vigorously promote investor education,popularize financial knowledge,shape the correct value investment concept for ordinary investors,and avoid investors to appear investment psychological barriers;Secondly,it is suggested that family investors should allocate assets more effectively,improve their investment concepts by actively participating in financial knowledge learning,and appropriately seek professional help;Third,financial institutions should increase investment in research and development,follow the pace of the times and the guidance of relevant landing policies,actively develop diversified financial products,reduce the entry threshold for investors,and construct diversified financial markets.