What are your thoughts between risk aversion and financial literacy?

Are you confusing between

1) financial literacy and

2) investment knowledge and portfolio management risk?

FInancial Literacy is about understanding what are the basic calculations required for investment and the different types of investment available in the market.

What is CAGR *compound annual growth rate

What is XIRR * extended internal rate of return

What is IRR * internal rate of return

What is simple and compounding interest?

Simple - 30% / 5 years = 6% simple interest

Compounding interest = 30% / 5 yearly interest = 5.39%

Investment knowledge and portfolio is a sub-set and niche area of personal finance / financial literacy. It covers P/B, P/E, what are the items to look out for, including risk management strategies for the particular stock / index / etf you are holding.

You may also wish to read up on DCA versus stock picking and knowing when to buy.

Stock picking also needs to have diversification and is not low risk. Stocks are never low risk. Financial literacy doesnt mean you will always pick the correct stocks and thus low risk with high returns. If you have strong financial literacy but you are not mentally strong and tends to panic a lot , you might constantly panic sell when price drop and lose even more money. No matter what ways you use to invest in stocks, I dont think its a good idea to think stocks are low risk. If you dont have lump sum and you dca on a stock that you did your research on which is stock picking, theres nothing wrong with that.