Chapter 6: The Green Investment Mindset: Exploring the Influence of Financial Knowledge, Risk Tolerance, and Awareness Among Gen-Z

Rapid economic growth and technological advances have reshaped investing into highly accessible wealth-building. Generation Z (Gen Z)—raised in a globally connected, tech-driven society—is entering financial markets but often lacks a deep understanding of market mechanisms, investment principles, and risk management. This study examines how financial knowledge, awareness, and risk tolerance influence Gen Z’s investment decisions and evaluates the National Center for Financial Education’s (NCFE) role in fostering financial literacy among university students in Delhi NCR.

Primary data were collected via an online questionnaire from 365 university students born between 1996 and 2009, residing in Delhi NCR, assessing levels of financial knowledge, financial awareness, risk tolerance, and exposure to NCFE initiatives. Structural Equation Modeling (SEM) using SmartPLS was employed to test hypothesized relationships among these constructs and to measure the effectiveness of NCFE-driven financial education in shaping investment behaviors.

SEM results reveal greater financial knowledge and awareness significantly enhance risk tolerance, resulting in more informed investment decisions among Gen Z students. Participation in NCFE programs shows a positive effect on financial literacy metrics, indirectly boosting students’ confidence in managing investment risks. Gaps remain in understanding complex financial instruments and advanced risk-mitigation strategies, indicating that even with NCFE interventions, targeted educational efforts are still required.

By focusing on a tech-savvy but under-explored demographic within the specific context of Delhi NCR, the research offers actionable insights for policymakers, educators, and financial institutions aiming to design tailored financial literacy programs that empower young adults to navigate today’s sophisticated investment landscape.