Relationship between Financial Literacy and Investment Behavior among Millennials
DOI:
https://doi.org/10.47672/ajf.1808Keywords:
Financial, Literacy, Investment Behavior, MillennialsAbstract
Purpose: The aim of the study was to assess the relationship between financial literacy and investment behavior among millennials.
Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
Findings: Several studies have highlighted a significant relationship between financial literacy and investment behavior among millennials. Findings suggest that millennials with higher levels of financial literacy tend to exhibit more proactive investment behaviors, such as saving for retirement, diversified portfolio allocation, and increased participation in the stock market. Additionally, greater financial literacy correlates with better understanding of investment products and associated risks, leading to more informed decision-making. Conversely, those with lower financial literacy are more prone to behavioral biases, such as overconfidence or risk aversion, which can hinder their investment activities. These findings underscore the importance of promoting financial education initiatives targeted at millennials to enhance their investment knowledge and ultimately improve their financial well-being.
Implications to Theory, Practice and Policy: Behavioral finance theory, human capital theory and social learning theory may be use to anchor future studies on assessing the relationship between financial literacy and investment behavior among millennials. Financial institutions, educational institutions, and employers should collaborate to develop tailored financial education programs targeting millennials. Policymakers should advocate for the integration of financial literacy into formal education curricula at both the secondary and tertiary levels.
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