Financial Literacy Impact on Investment Decisions

Mr. M. Prasad Rao 1, L. Sai Bhandhavi 2

Assistant professor, Department of MBA, CMR Institute of technology, Hyderabad, Telangana,India,

MBA (Finance), CMR Institute of Technology, Hyderabad, Telangana, India

Email ID: saibhandhavi06@gmail.com

ABSTRACT:

 Financial literacy has become an essential skill for individuals navigating increasingly complex financial markets. This study examines the impact of financial literacy on investment decisions by analysing how financial knowledge influences investment preferences, risk tolerance, and financial planning behaviour. The research highlights that individuals with higher levels of financial literacy are more likely to make informed investment decisions, diversify their portfolios, and avoid common behavioural biases. The study uses survey-based data and descriptive statistical analysis to evaluate the relationship between financial knowledge and investment practices. The findings indicate a positive association between financial literacy and rational investment behaviour, emphasizing the importance of financial education in promoting long-term financial well-being. The study concludes that improving financial literacy can strengthen individual financial security and contribute to broader economic development.

Keywords: Financial Literacy, Investment Decisions, Risk Tolerance, Financial Planning, Investor Behaviour, Personal Finance