Smart investing: Unveiling key drivers of strategic investment for investors in the Indonesia Stock Exchange

• Published in: Investment Management and Financial Innovations
• Main Author: Loebiantoro I.Y.; Cheng E.H.; Annuar N.
• Format: Article
• Language: English
• Published: LLC CPC Business Perspectives 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85207419249&doi=10.21511%2fimfi.21%284%29.2024.13&partnerID=40&md5=4165fa8427c8b8c0c0fc18b1e4b99afb

To achieve the optimal investment decision, people should have better financial literacy. A better understanding of stock investment can be obtained through having experience investing in the stock market. Besides experience, influences from financial socialization agents such as family, friends, education, and media will improve financial knowledge. Hence, it will determine investments wisely. The aim of this study is to determine the degree to which financial experience, family, peers, formal education, media, and financial literacy have direct on impact investment decisions and furthermore to determine the role of financial literacy as mediating variable between financial experience, family, peers, formal education, media, and investment decisions. Investors who have already registered on the Indonesia Stock Exchange are the respondents to this study. Only those investors are allowed to invest in the Indonesian stock market. There are 716 respondents who were analyzed using self-administered questionnaires and structural equation modeling (SmartPLS). Findings show that peers and financial literacy have a direct positive impact (p<0.05) on investment decisions, while financial experience, family, education, and media do not (p>0.05). Additionally, financial experience, peers, education, and media have a significant positive effect on financial literacy (p<0.05), while family does not (p>0.05). Financial literacy is shown to mediate the relationship between financial experience, peers, education, media, and investment decisions (p<0.05) but not with family (p>0.05). This implies that having financial experience improves financial literacy, which leads to better investment decisions. Furthermore, peers, education, and media all play an important role in increasing financial literacy to make optimal investment decisions. © Ika Yanuarti Loebiantoro, Eaw Hooi Cheng, Nursyamilah Annuar, 2024.