“Impact of financial literacy and Risk Tolerance on Investment Decision”

Abstract

Researcher has followed a widespread approach for explain the relationship between financial literacy, risk tolerance and investment decision. Recently there has been increasing interest in studying the behaviors of investors and the factors which affecting the investment decisions of investors due to a synchronized approached followed by a large number of investors. A Study has been shown that a large number of investors look after the safety of their money not higher return.[1] Investment decision is a crucial decision which is influenced by various factors as financial literacy, income level, financial soundness and various other demographic and sociological factors. The choice of investment alternative of is broadly depends upon the risk tolerance level of investors.[2] On the basis of certain conclusion, cover from precious research, the researcher in this study defines the relationship between financial literacy, risk tolerance and financial decision making of investors through exploratory research tools. For explaining this relationship researcher gives a mediation model. By using this mediation model a direct relationship between Financial Literacy and Risk Tolerance and between Financial Literacy and Investment Decision via Risk Tolerance, can be explored.