The Influence of Financial Literacy, Risk Perception, and Income on Investment Decisions among Novice Investors in Indonesia

Abstract

This study investigates the influence of financial literacy, risk perception, and income on investment decisions among novice investors in Indonesia amid the rapid development of digital technology and increasing accessibility to capital markets. Using a quantitative approach with a survey method, data were collected through an online questionnaire from 284 respondents who met the criteria of novice investors and analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM) with WarpPLS 8.0 software. The findings reveal that financial literacy, risk perception, and income each have a positive and significant effect on investment decisions, indicating that adequate financial knowledge, awareness of investment risks, and sufficient income levels are essential factors in shaping rational and well-planned investment behavior. These results highlight the importance of strengthening financial literacy programs, enhancing risk education, and promoting income stability as key strategies to encourage healthy, informed, and sustainable investment participation among novice investors in Indonesia.