Financial Literacy, Risk Tolerance, Overconfidence, Experienced Regret, and Demographic Factors on Investment Decisions

Abstract

According to data released by the Indonesian Central Securities Depository (KSEI) in 2018-Sep 2021 there was an increase in Single Investor Identification on the capital market in Indonesia. This shows that the interest and awareness of investing is getting higher. Investment decisions must be made appropriately to avoid the risk of loss. This study aims to determine the effect of financial literacy, risk tolerance, overconfidence, experienced regret, gender, and income on investment decisions. The sample in this study was taken using a non-probability sampling method with purposive sampling technique and obtained as many as 129 investors respondents with domicile in Yogyakarta. Data were analyzed using multiple linear regression analysis. Data collection techniques by distributing questionnaires in the form of google form. The results of this study show that financial literacy, risk tolerance, overconfidence, and income have a significant positive effect on investors' investment decisions in Yogyakarta. Experienced regret has a significant negative effect on investment decisions. Gender has no effect on investment decisions.

Investment Decisions: Are Financial Knowledge, Risk Tolerance and Experience Important?

“…Each individual's financial Knowledge differs, resulting in different investment choices [1]. This is by research (Damayanti & Fauzi, 2020;Febriansyah et al, 2023;Mubaraq et al, [1] Ramadhan, [8] Resky & Arisandi, [5]). Based on the above explanation, the hypothesis proposed by the study is that the existence of Financial Knowledge can improve Investment Decisions.…”

“…Implementing Financial Knowledge in life, such as using the income earned and managing it for investment or daily life Mubaraq et al [1]. According to previous research conducted by (Damayanti & Fauzi,[6] Febriansyah et al, [7] Mubaraq et al, [1] Ramadhan, [8] Resky & Arisandi, [5], stated that there is an influence of financial knowledge on investment decisions, Nurin et al [9] research states that financial knowledge does not affect investment decisions.…”