The Effect of Financial Literacy on Investment Vehicle of Choice: A Study on Investors Aged 17-39

Abstract

Investment vehicles in Indonesia has grown vastly during the past few years. The number of young investors in Indonesia has grown significantly in the past years. In fact, majority of investors in Indonesia are millennials and gen z. Financial literacy is proven to be needed to make good financial decisions. However, the financial literacy level of younger generations of Indonesia still varies among the generations. This research will explore the level of financial literacy including its components financial knowledge, financial skills, and financial behavior among the millennials and generation z and their investment vehicle of choice. The research is a quantitative study and collects data through an online questionnaire on investors aged 17-39. For analysis technique, descriptive analysis and cross-tabulation is used. The results of this research shows that financial literacy level of millennials and gen z including financial knowledge, financial skills, and financial behavior does have an effect on investment vehicles of choice. Patterns in the results imply that samples with higher and lower financial literacy are more likely to prefer the stock market and bonds. On the other hand, millennials and gen z investors which has middle level of financial literacy more likely to prefer mutual funds.

Keywords: investment vehicle, financial behavior, financial knowledge, financial literacy, financial skills