Abstract

This study examines the relationship between financial literacy and investment decision of individual investors. Financial literacy of an individual’s is their level of understanding of financial matters which enables them to process financial information and make informed decisions about personal finance. It is difficult for a common man to understand the risk associated with the new age financial products. In order to understand risk and return associated with these products, a minimum level of financial literacy is a must. Financially literate individuals can make effective use of these financial products and services by evaluating associated risks and returns and finally choosing those products which are best suited to them.A total of 267 responses from online survey were collected using the convenience sampling technique. The five-point Likert scale questionnaire was used alongside the SPSS software for data analysis. The study indicated a strong positive relationship between financial literacy and investment decisions. The results suggest that financial Knowledge, Financial Attitude and Financial skills have significant effect on the investment decision. The study recommended that more financial literacy programs should be organized by the financial institution to create awareness. The government should also include financial literacy in the educational curriculum of the basic or elementary schools and higher learning institutions.

Key words: Financial literacy, investment decisions. Attitudes, Knowledge, Skills