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Does Financial Literacy Affect the Millennial’s Investment Preferences?

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Information and Communication Technology in Technical and Vocational Education and Training for Sustainable and Equal Opportunity

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Abstract

Investment is a way to boost economic growth and fight poverty in society. Specifically, investment in a company’s stock is an efficient way to encourage economic equality. Financial literacy is crucial for making informed financial decisions, but various investment choices need different financial literacy levels. This study aims to determine the effect of financial literacy on millennials’ investment choice preferences. This study used advanced financial literacy measurement in three dimensions: financial knowledge, financial attitude, and financial behavior. Meanwhile, investment choices are bank’s time deposits, gold, property, mutual funds, and corporate stocks. We surveyed millennial generation, and 247 valid respondents participated in this study. We used multiple regression methods to evaluate the data. We found that financial literacy positively affects millennials’ preference to invest in a company’s stock and mutual funds. However, there is insufficient evidence to conclude that financial literacy affects millennials’ investment preferences in a bank’s time deposits, gold, and real estate. Moreover, this study showed that the risk attitude only affects investment preferences on a company’s stock and positively moderates (strengthens) the financial attitude toward preferences on mutual funds.

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Acknowledgments

We express our deepest gratitude to Universitas Indonesia, who have funded this research through Grant PUTI 2022 No. NKB-067/UN2.RST/HKP.05.00/2022.

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Authors and Affiliations

  1. Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia

    Atika Ismaya Putri, Zuliani Dalimunthe, Rachmadi Agus Triono & Shalahuddin Haikal

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  1. Atika Ismaya Putri
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  2. Zuliani Dalimunthe
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  3. Rachmadi Agus Triono
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  4. Shalahuddin Haikal
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Correspondence to Zuliani Dalimunthe .

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Editors and Affiliations

  1. University College of Bahrain, Manama, Bahrain

    Reem Khamis Hamdan

  2. College of Business and Finance, Ahlia University, Manama, Bahrain

    Allam Hamdan

  3. Northern Cyprus Campus, Middle East Technical University, Kalkanlı, Türkiye

    Bahaaeddin Alareeni

  4. Notre Dame University – Louaize, Zouk Mosbeh, Lebanon

    Rim El Khoury

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Putri, A.I., Dalimunthe, Z., Triono, R.A., Haikal, S. (2024). Does Financial Literacy Affect the Millennial’s Investment Preferences?. In: Khamis Hamdan, R., Hamdan, A., Alareeni, B., Khoury, R.E. (eds) Information and Communication Technology in Technical and Vocational Education and Training for Sustainable and Equal Opportunity. Technical and Vocational Education and Training: Issues, Concerns and Prospects, vol 38. Springer, Singapore. https://doi.org/10.1007/978-981-99-6909-8_41

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  • DOI: https://doi.org/10.1007/978-981-99-6909-8_41

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