YEREVAN, November 7. /ARKA/. The discussion surrounding the enhancement of financial literacy is gaining momentum in Armenia—but what does this truly entail, and why is it crucial not just for individuals but for the economy as a whole? How are the perspectives of Armenians regarding money, investments, and risk evolving? What accounts for the growing interest among young people in the stock market, while older generations are enrolling in personal finance training programs? The responses to these inquiries and more can be found in an interview with Georgi Melkonyan, the Director of Freedom Academy Armenia.
ARKA – There is considerable discourse on financial literacy currently, yet interpretations of the term vary widely. How would you characterize financial literacy in the year 2025?
G. Melkonyan – Indeed, that is accurate; financial literacy can be understood in various ways. The primary objective of financial literacy is for individuals to grasp the origins of money, the sources of cash flow, and to cultivate a proper mindset towards money from the outset. Money is merely the most liquid asset, nothing beyond that, and it is essential to comprehend how to manage it. A financially literate individual is one who recognizes the nature of money and its practical applications.
ARKA – How would you evaluate the present state of financial literacy in Armenia? Are there any positive developments in comparison to the last ten years?
G. Melkonyan – There is indeed advancement. We regard our Academy, a project specifically designed for this purpose, as a crucial element in enhancing financial literacy.
I would like to emphasize that this matter has also been prioritized by both the current and previous administrations of the republic. It is always disadvantageous for a government to have a populace lacking financial education: for instance, when the state issues bonds, if individuals do not comprehend what they are, will they purchase them or lend money to the government? No, they will not.
Consequently, we have numerous initiatives. The Central Bank is also actively engaged in promoting financial literacy – quite effectively, albeit in a very focused manner. They discuss the banking system, deposits, savings accounts, how to obtain loans from a bank, and so forth.
When we examine financial literacy from the angle of financial management and banking interactions, we have observed remarkable progress. We have essentially resolved the issue of “hiding money under a mattress.” Nowadays, for the majority, a “mattress” is represented by a bank deposit. This marks a significant advancement.
Regarding investment activities, we essentially began from ground zero. This indicates that a very small fraction of the population is acquainted with investment instruments; for many, it remains an utter enigma. In reality, investing is something that every financially literate individual with an average or above-average income ought to understand.
ARKA – What motivated Freedom Broker Armenia to invest in public education?
G. Melkonyan: Our goal was to stimulate demand for education. During our educational events—courses, master classes—we explain the world of investing, how it’s structured, how it works, what stocks and bonds are, and how much you can earn. We also always discuss risks. The Academy’s goal is to ensure that Armenian society has the most rational understanding of what investing is. No myths, no pessimism, no optimism. Investing as it is.
ARKA – Freedom Academy Armenia provides training to a diverse array of students. Which demographic groups currently show the most interest in investing and personal finance management?
G. Melkonyan – The primary demographic, undoubtedly, is young individuals. There is a significant level of engagement among students: they are not only keen on investing as prospective investors but also view investment firms as potential employers. Students observe these companies and draw inspiration from their professors, some of whom actively engage in investing or have received education from international institutions.
We occasionally suggest that students at our Academy view films related to investing. This approach proves effective. For instance, “The Big Short” serves as a quintessential film about the 2008 financial crisis, and it is fascinating to witness individuals becoming intrigued while watching it, leading them to search for more information and pose questions. In general, the path to financial literacy begins with the individual: the information is always available; our role is to guide it. Thus, the target audience comprises young adults aged 25 and above, who are already earning and possess the capacity to invest, making them more inclined to seek knowledge. However, at our events, I frequently encounter older individuals—those aged 60 and above—who, when asked, “Are you merely curious or do you intend to invest?” respond, “We are still learning, but we have an interest.” While clients over 60 do not constitute the majority, they are certainly not negligible, and this marks progress: even the most traditional members of society are willing to broaden their financial understanding.
ARKA – In your view, what hinders Armenians from grasping finance: a deficiency in knowledge, ingrained habits, or a lack of trust in financial institutions?
G. Melkonyan – All the factors you mentioned are accurate. Our cultural mindset also contributes – we tend to be cautious about anything unfamiliar. It is essential to recognize that the current capital market in Armenia mirrors the state of developed countries’ markets from 15-20 years ago.
It is also important to highlight that during the initial phase of our independence, there was no stock exchange; privatization occurred via vouchers rather than through a stock exchange. At present, there are merely 12 publicly traded companies on the Armenian Stock Exchange, which is quite limited considering the substantial number of registered legal entities. Indeed, we possess a bond market that is more advanced than the stock market. Nevertheless, the quantity of publicly traded companies is a true indicator of the efficacy of a market economy and a stock market.
Numerous individuals possess a solid understanding of securities yet lack the skills to manage them effectively. People struggle to surmount a particular psychological barrier. They often misinterpret the risks associated with investing in financial markets, as stock exchanges provide both high-risk and relatively conservative investment options.
ARKA – Should the journey towards financial literacy commence with the understanding of fundamental concepts or with practical actions, such as budgeting and initial investments?
G. Melkonyan – Our philosophy revolves around the integration of theoretical knowledge and practical abilities. If we immediately engage in practical exercises, students often have questions, and it seems they are not fully grasping the material. Conversely, if they focus solely on theory, another issue arises: while it may be appealing and intriguing, what comes next? Therefore, our methodology is a blend of explaining, discussing, and theoretically exploring concepts while simultaneously demonstrating them in practice.
ARKA – Is investing a component of financial literacy, or does it represent an advanced stage—after an individual has acquired the skills to manage their finances?
G. Melkonyan – I think that an individual enters the realm of investing through the foundation of financial literacy. Without financial education, one may engage in investments and likely face losses. Consequently, this experience may deter them from investing in the future due to financial loss. Alternatively, they may find themselves involved in dubious schemes. The nature of investing is such that risk and reward are inherently linked. If you are promised minimal risk with substantial returns, it is likely that you are being deceived. In both business and investment contexts, our earnings, profits, and the money we generate serve as compensation for the risks we undertake. A minor risk yields a minor return, while a significant risk may offer a substantial return, albeit with the possibility of no return at all.
ARKA – What are the prevalent errors that novice investors commit in Armenia, and how can these be mitigated from an educational standpoint?
G. Melkonyan – A primary error individuals make is failing to fully grasp the risk-reward ratio. Overzealous ambition can lead to a misunderstanding of the stock market and its operations. Many believe that merely knowing what stocks and bonds are, along with having read a few news articles, qualifies them to generate substantial profits.
While it is indeed possible to earn money—basic investment strategies, such as purchasing stocks based on news reports, can be effective. For instance, if Trump makes a negative statement, stock prices may drop, presenting a buying opportunity; conversely, if prices increase later, one can sell for a profit. This does not require an economics degree to comprehend. Profits can be significant, often exceeding those from traditional deposits, especially considering the average interest rates on deposits in Armenia. It is feasible to earn at a level comparable to a respectable marginal business in Armenia, particularly when converting earnings into drams, as investments are typically made in dollars and other currencies.
However, claiming that one can become a millionaire or billionaire overnight is unrealistic—such occurrences do not happen in the stock market or any other market. This is precisely where our educational journey commences. My initial presentation slide is titled “Myths about the Stock Market,” where I aim to debunk these misconceptions before progressing to more comprehensive and in-depth learning.
ARKA – In what ways do digital technologies, including neural networks, assist Freedom Academy Armenia in imparting financial literacy to individuals?
G. Melkonyan: Using technology to expand our audience is a reality today. I wouldn’t say we see AI as a tool to replace human labor, something we do every day. But the potential of technology can be used to expand our audience and improve the quality of our products.
We are currently transitioning to online learning, while maintaining offline options, and are developing a dedicated page with a variety of recorded courses. We will try to make them more accessible. We plan to offer automatic certification upon completion of the courses. I think this will help us scale even further.
ARKA: Are there any cultural differences in Armenians’ attitudes toward money that influence how they make financial decisions?
G. Melkonyan: We Armenians love money very much. Sometimes we have an inappropriate attitude toward money; sometimes we fetishize it, but that’s a mistake. Money exists to be used wisely. There are people who find it very difficult to part with their money, even if they really need it. They’re only happy when their money or gold bars are kept at home and they can touch them. I also buy gold on the stock market; it’s a good investment. But why do I need a gold bar at home? What am I going to do with it? I know I have gold securities, which I can sell in one click much easier, faster, and more efficiently.
In terms of rationality and financial results, it’s the same thing, with one difference: I have lower transaction costs, meaning I don’t have to keep them in a safe. My securities, registered in our account at a depository in Cyprus, can’t be stolen; they don’t require security or an alarm system, and if I want to sell them, I can do it much faster than someone who keeps something in a safe at home.
We’re not accustomed to the virtual. So, if someone buys a share and isn’t given the paper, they feel like, “Is this share really real?” There’s nothing we can do about it; we’re not tasked with changing the world of someone who doesn’t want it. They’ve decided for themselves that they want to live this way, invest this way. And there’s no point in trying to convince them otherwise; it’s their choice.
We are not accustomed to the virtual realm. Therefore, when an individual purchases a stock and does not receive a physical certificate, they may question, “Is this stock genuinely available?” There is little we can do to alter this perception; our responsibility does not extend to changing the mindset of those who prefer not to. They have made a conscious decision to invest in this manner and live their lives accordingly. It is unnecessary to persuade them otherwise; it is their prerogative.
ARKA – Financial literacy is frequently linked to individual benefit. However, more broadly, what significance does it hold in the economic advancement of a nation?
G. Melkonyan – A financially literate populace contributes to a well-functioning economy, as it ought to. I can sincerely assert that individuals in the United States exhibit a higher level of financial literacy compared to those in Armenia. For instance, when Federal Reserve Chairman Jerome Powell delivers a speech, the audience pays close attention, subsequently analyzing his words to grasp their meaning and implications. There is even a humorous remark: he starts his address with “Good Afternoon,” and people quip, “It’s the most costly ‘Good Afternoon’ in the world.”
When the Chairman of the Central Bank of Armenia, Martin Galstyan, speaks, it is equally important for everyone to listen. We must ascertain whether the interest rate will be adjusted. Yet, if you inquire with the average individual about their thoughts on the interest rate, they might respond, “Why should I care? It won’t impact me…” In reality, it does. People often live in a state of disconnection from the economy.
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ARKA – The development of the market is of considerable importance in this context.
G. Melkonyan – It presents a classic chicken-or-egg dilemma. If everyone possessed financial literacy, the market would naturally seek to evolve. Conversely, if a market is already developed, whether one likes it or not, financial development will follow suit.
Why is it that everyone here understands the workings of banks, yet few know how to invest? This is due to Armenia’s relatively advanced banking system; individuals are familiar with, comprehend, and utilize it.
ARKA – In this regard, what influence do media and social media have on fostering public confidence in investments and financial institutions?
G. Melkonyan – They play a crucial role, arguably the most significant one. We engage actively with the media. Freedom Holding operates as a public entity, and we aim to enhance our visibility to the public. We are always receptive to media coverage. It is one thing for us to promote ourselves and highlight only the positive aspects, but it is entirely different when independent sources, particularly reputable ones, speak favorably about us. This is when public trust begins to build.
ARKA – How do schools and universities contribute to the development of financial acumen?
G. Melkonyan – Educational institutions should provide fundamental financial education, fostering an understanding of money, banking, and investment principles. This should ensure that every graduate, irrespective of their career path, possesses basic investment knowledge, at least having a grasp of what stocks are and the factors that affect market price fluctuations.
Universities ought to deliver more comprehensive training. A significant issue within Armenian universities has been their focus on theoretical knowledge, while we strive to incorporate practical elements. We collaborate with numerous Armenian universities. One cannot imagine the excitement in students’ eyes when they discover that their learning is applicable in real life. It is mutually beneficial. The Academy also gains significantly from this partnership, especially as it aids in enhancing the financial literacy of young individuals.
Investing in education is crucial, particularly in light of our long-term objectives. We have implemented an educational strategy, which is a detailed document, and it represents our current vision.
ARKA – Which of the Academy’s initiatives do you regard as the most successful?
G. Melkonyan – Given the numerous projects we have, I would like to emphasize the first one we initiated last year. These are our open, foundational webinars titled “Say Hello to Investments,” which we conduct bi-monthly. Initially, we had 10-20 participants in each session, which I found truly gratifying. Currently, we host broadcasts with 500-800 attendees, and new individuals join us each time.
This is our product, the one we introduced to the market, and its success instills hope that our other initiatives will also thrive.
ARKA – Lastly, what personal advice would you offer to every Armenian regarding the journey to financial independence? What initial step can enhance a person’s financial literacy by tomorrow?
G. Melkonyan – That is an excellent question. Begin with self-reflection and recognize that achieving your goals is feasible when you not only discuss them but also take action. We tend to speak extensively while taking minimal action. As your knowledge expands, so too will your opportunities.
The primary piece of advice is to not hesitate in taking that first step. Following that, the subsequent steps will naturally unfold.-0-
