FINANCIAL LITERACY, RISK TOLERANCE, AND BEHAVIOURAL BIASES INFLUENCING INVESTMENT DECISIONS AMONG RETAIL INVESTORS IN INDIA

The growing participation of retail investors in financial markets has increased the need to understand the key factors shaping individual investment decisions.Although access to financial information and digital investment platforms has improved significantly in recent years, many investors continue to exhibit irrational investment behaviour due to inadequate financial knowledge and the influence of psychological factors.In this context, the present study investigates the impact of financial literacy, risk tolerance, and behavioural biases on investment decisionmaking among retail investors in India.The study adopts a quantitative research approach using primary data collected from 300 respondents through a structured questionnaire.Statistical techniques, including correlation and multiple regression analysis, were employed to examine the relationships among the study variables and to test the proposed hypotheses.The findings indicate that financial literacy plays a significant role in promoting rational investment decisions, while risk tolerance influences the selection of investment alternatives based on individual risk preferences.However, behavioural biases such as overconfidence, herd behaviour, and loss aversion were found to significantly affect investment choices, even among financially knowledgeable investors.The study contributes to the existing literature on behavioural finance by providing empirical evidence on the combined influence of cognitive and psychological factors on investment behaviour.The findings offer practical implications for policymakers, financial institutions, and investor education initiatives aimed at enhancing financial awareness and improving investment decision-making.