Financial Literacy and its Contributing Factors in Investment Decisions among Urban Populace

Abstract

Objectives: Financial literacy helps the persons to understand the information regarding financial aspects and make well-versed decisions when investing their money. The key objective is to explore the literacy level of individual in investment decisions and to suggest sustainable measures of increasing the awareness level in urban areas. Methods and Analysis: The study covered the 200 investors residing in the area of Chennai (Tier-1) and Trichy (Tier-2). Simple random sampling has been followed to collect the primary data from the investors to analyze theirApplications/Improvements: literacy level. Primary data was gathered with help of the questionnaire and secondary data from the related research journal publications and websites. Primary data collected were analyzed using SPSS package and statistical tools like percentage analysis and factor analysis. Findings: Five variables are loaded on five factor and all are positive loadings based on the loadings the factor is named was as ‘facing the problem in investment’. Based on the Factor analysis, in total, five factors such as ‘investment decisions personally, revision of the investment, maintaining the investment portfolio, influence on personal investment and facing the problem in investment’ are able to extract 72.9% of variance. These five factors were identified as important factors influencing the financial literacy. Applications/Improvements: This study can be applied to the investors of any kind to make a rational financial decision to achieve their financial goal.