Financial Literacy, Risk Perception, and Herding Effects on Investment Decisions

Financial Literacy, Risk Perception, and Herding Effects on Investment Decisions

Dian Primanita Oktasari1, Nunu Nurjaya2, Subur Karyatun2
1Faculty of Economics and Business, Universitas Mercu Buana, Indonesia
2Faculty of Economics and Business, Universitas Nasional, Indonesia
DOI: https://doi.org/10.51244/IJRSI.2023.10602
Received: 01 June 2023; Accepted: 08 June 2023; Published: 04 July 2023

Abstract: – This study aims to analyze financial literacy, risk perception, and herding and its impact on investment decisions. The population in this research is an investor in Jakarta. The sample used is 100 respondents. Calculate based on Lameshow’s formula. The method of data collection using the survey method, with the research instrument is a questionnaire. The data analysis method uses descriptive analytics. This study proves that financial literacy has a positive and significant effect on investment decisions, risk perception has a positive and significant effect on investment decisions and herding has not had a significant effect on investment decisions.

Keywords: Investment Decisions, Financial Literacy, Risk Perception, Herding, Investor.

I. Introduction

Nowadays investment is an important part for most people. Investment is one way to utilize the money you have. Because everyone has increasing needs and wants. Needs and wants are increasingly difficult to distinguish because the demands of the times are growing. To support an increasingly complex lifestyle, there are many demands to fulfill it. With that, one source of income is not enough. It is also part of the importance of using the money we have to meet all the needs of today.
The impact due to Covid-19 on the Indonesian economy in the first half of 2020 was contracted due to delays in investment in the real sector plus domestic demand which fell quite rapidly. The significant decline in global economic activity had a major impact on the capital market since the beginning of the year. Financial markets were affected.
During a pandemic like this, each individual will definitely be more careful in spending money and will be more careful in terms of financial vigilance because it is important for now to provide emergency funds to keep finances healthy. Thus, at times like this, individuals are also more careful in making decisions when they want to invest. Conduct more analysis and consideration than usual to prevent losses in difficult times like this.