Financial literacy and investment choice decisions: Evidence from Australian superannuation fund members

For most Australians, superannuation should be a source of financial security in retirement. However, with the increasing level of choice available in superannuation, financial literacy of the participants needs to be considered. This study assesses the financial literacy of superannuation participants through a survey of 594 fund members. We find superannuation fund members with higher levels of financial literacy, measured both objectively and subjectively, are more likely to exercise investment choice. We also find higher financial risk tolerance is positively associated with financial literacy. The research contributes to the literature on investment choice decisions in the context of the mandatory superannuation system in Australia which has implications for policy-makers and the superannuation industry.