Can (Financial) Ignorance Be Bliss?

16 Pages Posted: 29 Aug 2018 Last revised: 11 Oct 2018

See all articles by Arun Muralidhar

Arun Muralidhar

AlphaEngine Global Investment Solutions; George Washington University

Date Written: August 19, 2017


Financial illiteracy is widespread and leads to bad financial decisions. Individuals cannot answer basic questions about inflation, compounding, and diversification. This paper argues that financial literacy programs be complemented with new financial instruments that embed goal-specific compounding and inflation protection. These interest-only real bonds, with a forward start date, would pay coupons for the period required for the respective goal. Further, there is ample potential supply from natural issuers. This innovation trivializes the investment problem to just simple multiplication or division thereby addressing the challenge of financial illiteracy with financial innovation across a range of saving/investment goals!

Keywords: Financial Literacy; Financial Innovation; Retirement Bond; BFFS, SeLFIES, College Bond; 529 Plans; BEST; Goals-Based Investing; GBI; MPT Challenges; TIPS

JEL Classification: G10; G11

Suggested Citation

Muralidhar, Arun, Can (Financial) Ignorance Be Bliss? (August 19, 2017). Financial Analysts Journal, Forthcoming, Available at SSRN: or

Arun Muralidhar (Contact Author)

AlphaEngine Global Investment Solutions ( email )

Great Falls, VA
United States


George Washington University ( email )

2121 I Street NW
Washington, DC 20052
United States

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