Unveiling Investment Choices: The Interplay of Financial Literacy, Motivation, and Income in Indonesia’s Thriving Capital Market

Abstract

This study investigates the pivotal roles of financial literacy and motivation in shaping investment decisions within the dynamic landscape of the Indonesian capital market, emphasizing the moderating effect of income on these relationships. Drawing from a robust sample of real investors, the research underscores the practical implications for actual market participants. Employing a quantitative approach, primary data were collected through purposive sampling, surveying 385 active investors with monthly incomes and registered Single Investor Identification (SID) accounts via online questionnaires. Structural Equation Modeling–Partial Least Squares (SEM-PLS) analysis reveals that financial literacy significantly enhances investment decisions by equipping investors with the knowledge to navigate complex financial instruments and risks effectively.  Results:  Similarly, motivation serves as a critical driver, fostering strategic financial goal-setting among investors. Notably, income acts as a moderating variable, amplifying the influence of both financial literacy and motivation on investment decisions. These findings highlight the importance of promoting financial education and motivational incentives, tailored to income levels, to empower real investors and provide actionable insights for stakeholders aiming to enhance participation and success in Indonesia’s rapidly evolving capital market