The role of financial literacy in retirement investment choice

• Authors: Thi Anh Nhu Nguyen , Jiří Polách , Iveta Vozňáková

Abstracts

EN

Research background: Preparation for retirement is a major concern for the people in the workforce as they have to encounter considerable difficulties in making the right investment decisions for their retirement. Purpose of the article: This research extends the literature on personal finance by investigating the impact of both financial literacy levels and pension knowledge on employees? investment choice decision for their retirement, while in previous literature the role of these factors has mainly been explored separately.  Methods: To conduct the research, a survey questionnaire was applied to collect data in three main regions of Vietnam comprising Northern, Central and Southern Vietnam. Data collection was made in 2018, in which 427 valid questionnaires were used for data analysis from 700 questionnaires. Two estimation methods are employed for analysis in this study, including a linear probability model (LPM) and two-stage least squares (2SLS) model. The findings of this research remain significant after the Two-Stage Least Squares (2SLS) regression model is used as an estimation technique to eliminate potential bias caused by endogenous problems. Finding & Value added: The results show that basic financial literacy level and pension knowledge are principal factors which significantly increase the probability of exercising retirement investment choice of employees, while advanced financial literacy level factor has a significant effect on choosing growth investing options for their retirement. Further, this research finds that there is no correlation between employees? financial risk tolerance and their retirement investment choice. Furthermore, the study proposes and offers new evidence that pension knowledge is a decisive factor providing employees with encouragement to exercise retirement investment choice and those who consult with financial advisors tend to take part in growth investing option.

Keywords

EN

financial literacy; retirement; investment choice; financial advice; pension knowledge

• Publisher: Instytut Badań Gospodarczych
• Journal: Equilibrium. Quarterly Journal of Economics and Economic Policy
• Year: 2019
• Volume: 14
• Issue: 4
• Pages: 569-589

Dates

published

2019

Contributors

author

Thi Anh Nhu Nguyen

• Ho Chi Minh City Open University

• https://orcid.org/0000000336194655

author

Jiří Polách

• College of Entrepreneurship and Law

• https://orcid.org/0000000222240414

author

Iveta Vozňáková

• College of Entrepreneurship and Law

• https://orcid.org/0000000308529809

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Identifiers

DOI

10.24136/eq.2019.027

Biblioteka Nauki

22446398