Financial Risk Tolerance and Investment Behaviour among Young Investors: An Empirical Study

Abstract

Investment behaviour among young investors has attracted considerable attention in recent years due to increasing participation in financial markets, greater accessibility to digital investment platforms, and rising financial awareness. Despite the availability of diverse investment opportunities, young investors often exhibit varying investment behaviours because of differences in their financial risk tolerance, financial literacy, investment knowledge, income, and investment experience. The present study examines the influence of financial risk tolerance on investment behaviour among young investors while considering financial literacy, investment knowledge, income level, and investment experience as additional explanatory variables. A quantitative research design was adopted using a structured questionnaire administered to 320 young investors aged between 21 and 35 years. Convenience sampling was employed for data collection. Descriptive statistics, reliability analysis, Pearson correlation, and multiple regression analysis were proposed to examine the relationships among the study variables. The study is grounded in Modern Portfolio Theory, Expected Utility Theory, and Behavioural Finance Theory, which collectively explain investor decision-making under uncertainty. The findings indicate that financial risk tolerance significantly influences investment behaviour, while financial literacy and investment knowledge also demonstrate positive relationships with investment decisions. Income and investment experience further strengthen investment participation by enhancing confidence and decision-making ability. The study contributes to behavioural finance literature by providing empirical evidence on factors influencing investment behaviour among young investors in India. The findings may assist financial advisors, policymakers, educational institutions, and financial service providers in designing effective financial education programmes and investment products suited to the needs of young investors.