Financial literacy, debt, risk tolerance and retirement preparedness: Evidence from New Zealand

The study investigated the direct effects of financial literacy (knowledge, skills, and attitudes) on financial preparedness for retirement and the moderating effect of age among the small and medium enterprises in Uganda. Primary data was collected from a sample of n = 380 selected from the SME workforce. Descriptive analysis was run on SPSS, while validity and reliability of the measurement items yielded satisfactory composite reliability scores and average variance explained (AVE) scores for all items. Structural equation modelling (SEM) was used to test the hypotheses and multi-group analysis conducted to test for the moderating effect of age on the relationship between financial literacy and retirement preparedness. The results revealed that knowledge and skills were significant predictors of retirement preparedness. However, ‘attitude' was not a significant predictor, and age had no moderating effect on the relationship between the study variables. These findings present practical implications for policymakers and financial educators in a developing country context.

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Retirement Preparedness: How Important Is Being Financially Literate?

Innovation in Aging ◽

10.1093/geroni/igaa057.1440 ◽

2020 ◽

Vol 4 (Supplement_1) ◽

pp. 445-445

Author(s):

Mengya Wang ◽

Suzanne Bartholomae

Keyword(s):

Financial Literacy ◽

Retirement Planning ◽

The Other ◽

Financial Security ◽

Lower Odds ◽

Highly Educated ◽

Retirement Preparedness ◽

The Us ◽

Risk Takers ◽

Policies And Programs

Abstract Financial security in retirement is a major concern for many Americans. Numerous studies document that Americans are not prepared for retirement, with financial illiteracy cited as one reason Americans fail to plan. Employing data from the 2018 National Financial Capability Study (N=27,091), this study investigates actual financial literacy (AFL) and perceived financial literacy (PFL) and how combinations of this measure influences retirement planning, and varies based on years from retirement. This study found relatively low financial literacy and retirement preparedness levels among the US sample, even for those pre-retirees ages 55 to 64. Individually, PFL and AFL increased as one approached retirement. When combined, adults nearing retirement (55 to 64) comprised the greatest proportion of the high AFL and high PFL (29.9%) group compared to adults 20 years or more from retirement (18-44) who largely made up the low AFL and PFL (48%) group. Based on a logistic regression, adults closest to retirement (ages 55 to 64) are more likely to be planning compared to the other groups, as are adults who were financially confident, risk takers, highly educated, males, and white. Compared to adults with high AFL and high PFL, adults with low AFL and low PFL, or a combination (low PFL and high AFL, high PFL and low AFL) have lower odds of preparing for retirement. Both PFL and AFL influences retirement planning, and PFL may be as important as AFL. Our highlight the importance of policies and programs to support Americans with retirement planning.

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The impact of financial literacy and financial interest on risk tolerance

Journal of Behavioral and Experimental Finance ◽

10.1016/j.jbef.2020.100450 ◽

2021 ◽

Vol 29 ◽

pp. 100450

Author(s):

Cecilia Hermansson ◽

Sara Jonsson

Keyword(s):

Financial Literacy ◽

Risk Tolerance ◽

Financial Interest ◽

The Impact

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PENGARUH FINANCIAL LITERACY, RISK TOLERANCE DAN OVERCONFIDENCE TERHADAP PENGAMBILAN KEPUTUSAN INVESTASI PADA USIA PRODUKTIF DI KOTA BANDUNG

Jurnal Mitra Manajemen ◽

10.52160/ejmm.v4i2.344 ◽

2020 ◽

Vol 4 (2) ◽

pp. 236-250

Author(s):

Ni Putu Priscilia Kartika Dewi ◽

Astrie Krisnawati

Keyword(s):

Financial Literacy ◽

Risk Tolerance

Indeks Literasi Keuangan Indonesia masih rendah, karena itu pemerintah melalui Otoritas Jasa Keuangan berfokus pada peningkatan literasi keuangan khususnya penduduk yang berusia produktif. Pemilihan jenis investasi akan dipengaruhi oleh toleransi seorang investor terhadap risiko. Tingkat kepercayaan diri seseorang juga akan mempengaruhi dalam keputusan investasinya. Penelitian ini bertujuan untuk mengetahui pengaruh financial literacy, risk tolerance, dan overconfidence terhadap pengambilan keputusan investasi pada usia produktif di kota Bandung. Penelitian ini dilakukan dengan metode kuantitatif, data yang digunakan ialah dengan menyebarkan kuisioner kepada masyarakat usia produktif di Kota Bandung dengan total 400 responden. Analisis data menggunakan teknik analisis deskriptif, analisis regresi berganda untuk menjawab hipotesis yang diajukan. Hasil penelitian menunjukkan bahwa secara parsial variabel Financial Literacy, Risk Tolerance, dan Overconfidence berpengaruh signifikan terhadap pengambilan Keputusan Investasi pada usia produktif di Kota Bandung, dan Financial Literacy, Risk Tolerance, dan Overconfidence berpengaruh signifikan secara simultan terhadap pengambilan keputusan investasi pada usia produktif di Kota Bandung.

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Financial Literacy, Risk Tolerance, and Financial Management of Micro-enterprise Actors

Society ◽

10.33019/society.v9i1.277 ◽

2021 ◽

Vol 9 (1) ◽

pp. 174-186

Author(s):

Heni Hirawati ◽

Yacobo P Sijabat ◽

Axel Giovanni

Keyword(s):

Financial Literacy ◽

Financial Management ◽

Research Method ◽

Business Owners ◽

Risk Tolerance ◽

Central Java ◽

The Poor ◽

Central Java Province ◽

Micro Enterprises ◽

Special Region

Micro-enterprises have a significant role in the country’s economy. However, business owners must face various problems to develop their business. One of the problems is the limited funding for micro-enterprises due to the low financial literacy of business owners. In addition, the business owner’s tolerance for risk is also expected to affect the financial management of micro-enterprises. This study aims to determine the level of financial literacy andtolerance of business owners and the financial management of micro-enterprises. This research method uses a questionnaire distributed to micro-enterprise owners in Central Java Province and Yogyakarta Special Region. The results showed that the level of financial literacy of micro-enterprise owners was in the medium category. Micro-enterprise owners have a neutral attitude towards risk and are not individuals who dare to take risks but do not avoid risk. Financial management carried out by business owners is still in the poor category. Improvement of financial literacy, understanding of risks, and financial management of micro-enterprises still need to be done.

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A qualitative phenomenological exploration of social mood and investors’ risk tolerance in an emerging economy

Qualitative Research in Financial Markets ◽

10.1108/qrfm-01-2021-0006 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Humaira Asad ◽

Iqra Toqeer ◽

Khalid Mahmood

Keyword(s):

Theoretical Model ◽

Thematic Analysis ◽

Financial Literacy ◽

Financial Risk ◽

Theoretical Perspective ◽

Emerging Economy ◽

Risk Tolerance ◽

Validity And Reliability ◽

Content Type ◽

Depth Analysis

Purpose The authors design a theoretical perspective that explores how different phases of social mood influence financial risk tolerance (FRT) among investors. Risk is involved in almost all financial decision-making. For a better understanding of risk tolerance behavior, the role played by social mood cannot be ignored. This study aims to explore the linkage between social mood and FRT of investors in Pakistan. Design/methodology/approach Using qualitative phenomenology as the guiding framework, 22 interviews were conducted to have a deeper understanding of the lived experiences of investors with at least 10 years of investment experience. Thematic analysis was done to analyze data. Audio-recording, bracketing, triangulation and member checking were done to ensure validity and reliability. Findings A theoretical model is developed using the six themes identified through thematic analysis. This model presents an in-depth analysis of the determinants of social mood, its multiple phases and its impact on risk tolerance behavior. Findings reveal that the level of financial literacy, experience and purpose of investment moderate the effect of social mood on FRT. Practical implications Investors can manage risk and increase their profits by controlling the effects of social mood. They can benefit from the market situation by taking more risk when the market is extremely low. The advisors can frame their advice in the light of the model. Originality/value According to the authors’ knowledge, this is the first study that explores investors’ risk tolerance in response to variations in social mood in the context of an emerging economy. The paper has contributed conceptually and methodologically. It uses phenomenology as the method and develops a theoretical model that describes how different types of investors adjust their risk tolerance in response to changes in their social mood.

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