Journal de l'économie mondiale

Portfolio Management Simulation as a Learning Tool

Abstract

Gvozdsnovic I and Njavro M

Croatia’s financial and capital market is relatively well developed in terms of providing investors and potential investors with access to trading domestically and abroad. The investing infrastructure is by and large in place and is aligned fully with the EU standards. However, most of the active and particularly would-be investors received none or very limited financial and investment education. This result in inferior financial skills and less than adequate asset allocation for the Croatian average investor. A cumulative effect of financially suboptimal literacy of investors has a nation-wide negative impact with less than efficient capital market being only one of its manifestations. With the surge of easily available portfolio management simulations such as Stocktrak, investment and financial concepts are much easier to grasp, understand and implement in the real investment world. Stocktrak simulation proved to be an invaluable supplement in raising financial literacy among finance students and those willing to manage their finances. The paper explores advantages of using the simulation as a supplemental learning curve and demonstrates its importance in dismantling cumulative investing illiteracy in Croatia, which is prerequisite for better asset allocation and the first step towards a more efficient domestic capital market.