FINANCIAL LITERACY, DEMOGRAPHICS, AND THE ROADBLOCKS TO MUTUAL FUND ADOPTION

Abstract

Mutual funds have emerged as one of the most accessible investment vehicles for retail investors, offering diversification, professional management, and affordability. However, adoption rates remain limited due to a combination of demographic influences and varying levels of financial literacy. This study investigates the market potential of mutual funds among retail investors while identifying the barriers to adoption arising from age, income, education, and awareness levels. Primary data were collected through surveys and analyzed to determine how demographic characteristics and financial literacy jointly shape investment decisions. The findings reveal that lack of knowledge, perceived risks, and mistrust in financial institutions serve as major obstacles, while younger and financially literate investors exhibit higher adoption intent. The study highlights the importance of targeted investor education and transparent communication to bridge the gap between awareness and adoption. Ultimately, the research provides insights for policymakers, asset management companies, and financial advisors to design strategies that enhance participation in mutual funds and promote inclusive financial growth.