“Beyond age: Decoding the investment DNA of generations Z and Y in Indonesia”

Investment decisions are a matter of how individuals should allocate funds into investment forms that provide future benefits. This paper investigates the impact of financial literacy, perceptions of risk and returns, family background, income, and financial technology proficiency on investment decisions among Generations Z and Y in Indonesia. This study uses a quantitative approach, using primary data from 240 respondents through purposive sampling. Primary data were collected through a questionnaire survey to collect respondents’ perceptions and investment decisions. The Likert scale assesses indicators by eliciting responses to statements and questions. The Structural Equation Model Partial Least Square (SEM-PLS) approach was employed for analysis utilizing WarpPLS 8.0 software. The results show that financial literacy, risk and return perception, income, and fintech proficiency significantly influence investment decisions (p < 0.05), while family background does not (p > 0.05). In addition, fintech proficiency mediates the effects of financial literacy, risk perception, family background, and income on investment decisions (p < 0.05). These findings suggest that improving financial literacy and fintech skills can lead to better investment decisions among young investors. This study highlights the need for targeted financial education programs and innovative fintech solutions to support informed investment choices. Further research is recommended to explore additional factors influencing investment decisions and to develop strategies to improve financial decision-making in this demographic group.


INTRODUCTION
Effective personal financial management demands sound investment decisions.These decisions involve selecting appropriate instruments or assets to achieve individual financial goals and are crucial in influencing individual financial well-being.In recent years, the investment landscape has undergone significant changes with the emergence of Generations Z and Y as major players.These young investors bring different characteristics and preferences, shaped by the generation's unique experiences and perspectives, such as being tech-savvy and being more open to other types of investments, such as stocks, bonds, mutual funds, and cryptocurrencies.Generations Z and Y also have a long-term investment horizon oriented towards investments that positively impact society and the environment.In addition, Gen Z and Y prefer learning to invest independently rather than relying on financial planners by utilizing various online resources and investment communities.The development of technology and the importance of sustainable and ethical investment practices are increasingly shaping the way this generation makes investment decisions.Understanding this generation's investment DNA is critical for those in the financial

LITERATURE REVIEW AND HYPOTHESES
Investment decisions are a continuous investment process.If the performance measurement and evaluation stage has been passed and the results are not good, the investment decision can be started again until optimal results are achieved (Murphy et al., 2016).The concept of investing entails the act of postponing immediate consumption in order to allocate resources towards productive assets for a particular duration (Krawiec & Szydłowski, 2017).Investment refers to allocating financial resources or assets to generate future advantages.It involves committing a specific quantity of finances or resources from external sources to generate a sequence of returns over time.Investment activities refer to investing money by buying different financial assets (securities) or tangible assets (land, housing, or gold).This means that investment activities are activities carried out to avoid spending current money on purposeful activities to increase future profits (Berger & Udell, 1998).Investment decision behavior is the action of a policy decision taken in investing in assets or capital that will provide future benefits.An investment decision is a strategic approach that involves evaluating and selecting multiple investment possibilities to maximize future returns (Wen, 2010).
Financial literacy refers to an individual's capacity to comprehend and utilize financial information proficiently when making personal financial choices, including those related to investments ( H2: There is an influence of perceptions of risk and return on investment decisions.
H3: There is an influence of family background on investment decisions.
H4: There is an influence of income on investment decisions.
H5: There is an influence of financial technology proficiency on investment decisions.
H6: Financial technology proficiency mediates the influence of financial literacy on investment decisions.
H7: Financial technology proficiency mediates the influence of perceptions of risk and return on investment decisions.
H8: Financial technology proficiency mediates the influence of family background on investment decisions.
H9: Financial technology proficiency mediates the influence of income on investment decisions.
Figure 1 depicts the framework of this study.

METHODOLOGY
This study uses a quantitative method to determine the investment behavior of Gen Z and Gen Y in Indonesia.Generations Z and Y were chosen as research objects because 55% of Gen Z and Y in Indonesia live in urban areas and are more information literate, especially about investment information and information technology.The purposive sampling technique was employed to select 240 respondents as the research object.A questionnaire survey was implemented to gather respondents' perceptions and investment decisions as primary data.By soliciting responses to inquiries and statements, the Likert scale evaluates indicators.The Structural Equation Model Partial Least Square (SEM-PLS) model was employed to conduct data analysis, as it is deemed appropriate for testing intricate relationships between variables within the context of this research (Hair et al., 2021).Statistical analysis and data processing were implemented with the assistance of WarpPLS 8.0 software.This method was selected to gain a comprehensive understanding of the factors that influence the investment behavior of Generations Z and Y and offer valuable insights for the financial industry in developing products and services that better meet the needs of this demographic group.

RESULTS
This study uses SEM-PLS to analyze the relationship between variables.A critical aspect of SEM-PLS is evaluating the outer model, which aims to ensure convergent validity.Convergent validity measures how effectively an indicator reflects the concept it is intended to measure.The factor loading test is used to assess convergent validity, focusing on the strength of the relationship between the indicator and the construct being measured, as well as the indicator's ability to describe the overall variability of the construct.The results of the factor loading test in this study showed significant values above 0.70 for all indicators, indicating a strong relationship and a good representation of construct variability.Table 5 shows an R-squared value of 0.698 for the Audit Quality variable, categorized as Big Effect.This shows that the independent variable, namely financial technology proficiency, mediates the influence of financial literacy, perceptions of risk and return, family background, and income, significantly explaining 69.8% of the variance in investment decisions.
This study uses the Partial Least Squares (PLS) method to build models and formulate hypotheses.Hypothesis testing was carried out with a significance level of 0.05.The detailed results of hypothesis testing are presented in Table 6.
Based on the results of the research tests shown in Table 6, the conclusion is regarding the impact of financial technology proficiency, which mediates the influence of financial literacy, perceptions of risk and return, family background, and income on investment decisions of generations Z and Y in Indonesia.The research results show that financial literacy positively and significantly influences investment decisions, with a path coefficient (β) of 0.194 and a p-value of

DISCUSSION
This study shows that financial literacy positively and significantly influences the investment decisions of generations Z and Y.The high level of financial literacy is because this generation better understands various investment instruments, the associated risks, and their potential returns.Many financial education platforms and investment applications provide easy-to-understand information and analysis, helping young investors make better decisions.For example, applications such as Ajaib or Bareksa, popular in Indonesia, offer investment guides and analysis tools that are very useful for new users.Also, risk and return perceptions significantly influence investment decisions.This generation understands risk and potential returns well and tends to make more strategic and balanced investment decisions.This can be seen from the increasing number of young people diversifying their investment portfolios, including investing in stocks, bonds, mutual funds, and even cryptocurrencies.This generation is less likely to be afraid to take higher risks if they believe in the potential for greater returns.Previous research supports this study's findings (Adil et  Interestingly, family background does not have a significant influence on investment decisions.This is because Generation Z and Millennials are more independent in seeking information and learning about investments.They are more likely to rely on online resources and investment communities to gain knowledge and insight.For example, investment forums such as Stockbit or discussion groups on social media are often places for this generation to share information and experiences.Meanwhile, income has a significant favorable influence on in- vestment decisions.Individuals with higher incomes have more choices in diversification, asset allocation, and the ability to assume greater risk.Today, young professionals with high salaries tend to invest in higher-risk assets such as shares or property to achieve higher returns.This study's results contradict the research, showing that family background significantly affects investment decisions (Soleha & Hartati, 2021).
The ability to use fintech also has a significant favorable influence on investment decisions.Fintech makes accessing financial information, analytical tools, and investment platforms that help individuals manage their portfolios easy.For example, using applications such as GoPay for mutual fund investments or OVO Invest for shares allows the younger generation to invest quickly and efficiently.The results of the mediation test show that fintech proficiency increases the positive effects of financial literacy, risk and return perceptions, family background, and income on investment decisions.Financial literacy mediated by fintech skills significantly influences investment decisions, indicating that mastery of technology is essential in optimizing financial literacy.Likewise, risk and return perceptions mediated by fintech proficiency suggest that technology can help individuals make better investment decisions by providing quick and easy access to relevant information.
This study strengthens the findings in existing literature regarding factors that influence investment decisions.Financial literacy, an individual's ability to understand and use financial information effectively, has positively influenced investment decisions.Previous studies also show that individuals with a high level of financial literacy tend to make smarter and better investment decisions (Rahim The results of this study are also consistent with the finding that risk and return perceptions play an important role in investment decisions.Individuals with a low-risk perception tend to be more willing to take more significant risks for higher returns.In contrast, those with high-risk perceptions tend to choose more conservative investments.Huber

CONCLUSION
This study investigates the impact of financial literacy, risk and return perceptions, family background, income, and financial technology proficiency on investment decisions among Generations Z and Y in Indonesia.
The study reveals that financial literacy, perception of risk and return, income, and fintech skills influence the investment decisions of generations Z and Y in Indonesia.Interestingly, family background does not have a significant influence on investment decisions.Generations Z and Y rely on online resources and investment communities to gain knowledge and insight.Meanwhile, fintech proficiency increases the positive effects of financial literacy, risk and return perceptions, family background, and income on generation Z and Y investment decisions in Indonesia.
These research recommendations provide essential insights that can be applied by policymakers, financial service providers, and educators.The government can develop financial education programs in schools and universities that are integrated with modern financial technology.Financial service providers such as banks and fintech companies can create applications and platforms that are more user-friendly and offer interactive financial education features.In addition, educators can use digital tools and resources to teach students about financial management and investments, leveraging social media and educational videos to reach a more youthful audience.
This study also opens up opportunities for further exploration of other factors that influence the investment decisions of generations Z and Y.For example, further studies could examine the impact of financial influencers on social media on investment decisions or how loyalty programs and incentives from fintech platforms can motivate better investment behavior.Thus, these findings provide practical guidance and spur innovation to support the younger generation in making wiser and more informed investment decisions.

Table 1
presents the test results for all variables and indicators.The resulting outer loading value varies for each indicator for the latent variable.Indicators with an outer loading value above 0.70 are considered valid and meet the requirements for further analysis.

Table 6 .
Estimated results By mastering fintech, the younger generation can use financial literacy, understand risks and returns, and manage their income more effectively to achieve their desired investment goals.These findings provide valuable insights for financial service providers and educators to design programs and tools that better meet the needs and preferences of this demographic group.This research finding implies that programs to increase financial literacy and financial technology proficiency must be a top priority for policymakers, financial service providers, and educators in Indonesia.Comprehensive, technology-based financial education can help generations Z and Y make better investment decisions.Online resources and investment communities must be integrated into educational strategies because this generation is more likely to learn from digital platforms.In addition, fintech service providers must continue to develop features and tools that can improve users' understanding of investment and skills.Proficiency in using fintech has been proven to strengthen the positive effects of financial literacy, risk perception, and income on investment decisions.Hence, innovation in fintech needs to be encouraged to support young investors.Management and Financial Innovations, Volume 21,Issue 3, 2024 (3)p://dx.doi.org/10.21511/imfi.21(3).2024.31