The effects of financial literacy on personal investment decisions in real estate in Nairobi count

Abstract

This study assessed the financial literacy of the real estate investors who invested in the real estate industry in Nairobi County. In addition, it examined the relationsh ip between financial literacy and the influence of the factors that affect the investment decision. The objective of the study was to establish the effect of financial literacy on personal investment decision making by real estate investors . This study emp loyed a descriptive research design. The target population of this study was the real estate investors in Nairobi County. A modified questionnaire was developed and divided into three parts. The first part covers demographic variables. The second part cove rs the issues regarding personal investment decision making while the third part identifies several financial literacy factors affecting the investment decision by real estate investors in Nairobi. Out of a target population of 140, 115 respondents were us ed in the study. The results indicated that the financial literacy of the real estate investors is far from the needed level. The financial literacy level was found to have a significant effect on investment decision making by real estate investors . To ach ieve optimal outcomes in this complex decision making environment requires decision makers to have adequate levels of financial knowledge and skills. The call for enhanced financial literacy amongst consumers is a global phenomenon, driven by the growing c omplexity of financial markets and products. The study was limited due to the small sample of respondents which was 115 because of data collection cost. The design used was ex post facto research design where the researcher had no control over the independ ent variables because the effects of financial literacy on investment decisions had already occurred. The study recommends for further study in the impact of inflation rates on investment decisions and ways to mitigate against sudden losses due to inflatio n fluctuation. The study also recommends further study into the effect of non – financial factors on the process of making investment decisions