Assessing the effect of financial literacy on personal investment decisions of secondary school teachers under teachers service commission in Machakos sub County

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.