Financial literacy — the ability to understand and apply concepts such as interest, inflation, risk diversification, and compounding — is a critical determinant of sound investment behaviour, particularly among young adults making early independent financial decisions. This study empirically examines the impact of financial literacy on investment decision-making among 385 young adults (18–35 years) in Bengaluru city, using a structured questionnaire and stratified convenience sampling. Financial literacy was measured through a composite score (numeracy, interest/inflation comprehension, risk-return understanding, and product awareness) and related to an investment decision-making quality score (diversification, goal alignment, informed avenue selection) using correlation, multiple regression, one-way ANOVA, and chi-square tests. Results reveal a strong positive relationship between financial literacy and decision-making quality (r = 0.66, p < 0.05); financial knowledge and risk tolerance emerge as the strongest behavioural predictors, while lack of financial knowledge and fear of losing money are the leading barriers to informed investing. The study concludes with policy and managerial implications for financial institutions, investoreducation bodies, and regulators seeking to strengthen financial literacy and investment outcomes among urban youth.