Abstract:
The study was assessing the effect of financial literacy on personal investment decisions
among secondary teachers in Machakos Sub County. It explored on the reasons as to
why teachers in Machakos Sub County fail to invest for their future and investigated
on how their financial literacy contributes to the problem. The study was seeking to
determine the influence of knowledge on interest rates, inflation, risk diversification
and financial education on investment decisions of the TSC teachers in Machakos sub
county. The study used the learning, decision and theory of mental accounting in
supporting theoretical review. Empirical review has been done based on the objectives
of the study as well as the conceptual framework. The population of the study
comprised of 513 secondary teachers in Machakos Sub County. The Sub County has
three zones with a total of 43 secondary schools. The study used descriptive research
design with data being collected from both primary and secondary sources. The study
has used Purposive sampling to select the most accessible schools in those zones while
simple random sampling technique will be used to select 103 respondents from the
schools in Machakos Sub County. A self-administered questionnaire was pre tested
using 21 respondents and discussed with the supervisor to iron out ambiguities and
irrelevancies then delivered to the respondents and collected after completion. Once the
data was collected from the field, it was sorted to identify errors made by the
respondents such as spelling errors and un- responded questions. The questionnaire
included both closed and open ended questions. The data was then coded and keyed
into statistical package for social sciences (SPSS) computer programme for analysis.
Results of the analysis were represented through tables. Regression analysis was done
to test correlation between variables, Anova test done as well as coefficients of
determination done to establish the model equation. Then discussions of the results and
interpretation was done, the study concluded that there is existence of financial
illiteracy among teachers and a positive correlation between knowledge in interest rate,
inflation, risk diversification and financial education. Thus, the teachers must possess
this knowledge for effective investment decision making. The researcher recommended
legislative interventions on mobile banking and MFI on borrowing cost, introduction
of finance units in the curriculum all the way from primary to university and be made
compulsory to all educational degrees. The study further recommends that teachers pool
their ideas and resources together to identify best investment portfolio and thus mitigate
individual impact on risk.
