How Financial Literacy Impact Financial Decisions?

DOI: 10.34047/JAMAR.2024.v06i01.001

Abstract

Investment decisions are decisions about the allocation of funds to investment opportunities in a way that allows the investor to obtain the highest possible return. This decision is very important for both individuals and companies as it determines their financial stability and profitability. In order to make sound investment decisions, an investor should have adequate financial knowledge or be financially literate to make these decisions. Investment decisions encompass the psychological, cognitive, social and behavioral aspects of an individual, and financial literacy broadly encompasses the parameters of financial knowledge, financial behavior, financial attitudes and financial awareness.
Purpose: The purpose of this study is to investigate the influence of financial knowledge on individuals' investment decisions. The objective of this work is to capture and analyze the interrelationship between financial knowledge and the interaction of factors that influence an investor's investment decision. The objective is to examine and measure the level of financial literacy (including financial knowledge, behavior, attitude, and awareness) of an individual and the influence it has on the investment decisions he or she makes. 
Originality/Value: This look at is particular and groundbreaking in that it ambitions to explore each the actual direct and indirect
outcomes of economic knowledge on investor behavior and funding decisions, that have formerly been studied separately. Because the Design/Methodology/Approach: This study will be conducted as a cross-sectional study. To conduct this research, a structured questionnaire will be prepared and a survey of individual investors will be conducted. Both qualitative and quantitative techniques will be used to analyze the impact and investigate the correlation between financial knowledge and investment decisions.

Findings: The study we conducted showed that financial literacy has a significant impact on the investment decisions made by an
individual. The respondents who did not have sufficient knowledge of finance were reluctant to invest their money in various bonds and stocks. Investment decisions also depend on behavioral aspects, i.e. how a person behaves in various money-related issues and matters.
Awareness of investment opportunities is also an important issue. We found that a number of respondents did not have adequate
awareness of basic investment products available in the market.

Research limitations/implication: The limitation of this research could be the small sample that would limit its generalization. The
findings from the research could be enhanced by a larger sample and by conducting comparative studies in other regions or economies, since this research might be limited to Indians only.
Sample size/sample bias: For example, let's say 100 hundred people should participate in survey. Each person may give individual
results, but it does not mean that the same results belong to the whole population.
Access to data: You will not always be able to go through all the resources. You can't gather all the data you want for your research since it will take a lot of time. Because of it, your work might not cover each aspect.
Lack of time: Often deadlines are the reason why your study and research might not be complete. When we get a task, we have a limited amount of time to do it. To get a good grade, we need to submit the assignment prior to the deadline.

To conclude limitations are a good way to have an open discussion about what you discovered and how your results were affected by those limitations. Negative aspects of your study may even help you improve your research. Learn from your mistakes, and do your best to improve your work. If you need additional help with your work, you can always contact a professional to take care of it.

Practical Implications: The results of this study are important not only for the financial stability and well-being of the individual
investor, but also for the development of public policy and for other interested parties. Financial literacy affects not only the financial health of individuals, but also the economy as a whole. An economy in which more people are financially literate has higher GDP and better opportunities, and this knowledge also helps people in the economy escape the clutches of poverty and helplessness.

Originality/Value: This look at is particular and groundbreaking in that it ambitions to explore each the actual direct and indirect
outcomes of economic knowledge on investor behavior and funding decisions, that have formerly been studied separately. Because the selections someone makes within the present will have an effect on her or him for an extended period of time, it's miles imperative for her or him to expand an know-how of the complete international of finance with a purpose to keep away from making the wrong desire of financial products. Therefore, financial literacy is of brilliant importance.