International Research Journal of Education and Technology

This study investigates how financial literacy influences investment decisions among 100 young Indian professionals, primarily aged 18–25 from urban areas, especially Bengaluru. Using a 24-item structured Likert-scale questionnaire, the research measures financial knowledge (compound interest, SIP calculations, diversification, expense ratios), subjective confidence, risk tolerance, and actual investment practices.

Findings reveal moderate financial literacy levels (mean = 3.27, SD = 0.33) alongside conservative investment patterns: 45% prefer fixed deposits, 25% gold, and only 15% equity or mutual funds. A statistically significant positive relationship between financial literacy and investment behavior was found (r = 0.201, p = 0.007; β = 0.125, F = 7.571). High-literacy respondents were three times more likely to use SIPs (62% vs. 15%) and allocated 35% to equities compared to 8% by low-literacy peers. Social media significantly influences 51% of investment decisions, though its behavioral effect remains weak (r = 0.075, p = 0.315), indicating a "pseudo-literacy" phenomenon. Demographic moderators including income, urban location, and gender further shaped the literacy–behavior relationship.

Keywords: Financial literacy, Investment behavior, SIP adoption, Behavioral finance, Urban youth, India, Markowitz, Prospect Theory