Decoding Investment Intentions: Uncovering How Risk Tolerance, Financial Literacy, and Subjective Norms Drive Students to Begin Stock Investing

Abstract

Investment is the allocation of capital over a certain period to generate profit or increase asset value. This study examines the influence of risk tolerance, financial literacy, and subjective norms on university students' intention to invest in stocks in Bali, Indonesia, with a sample of 150 respondents. The Structural Equation Modeling - Partial Least Squares (SEM-PLS) method is used to analyze the relationships between these variables. Risk tolerance reflects students' readiness to face financial uncertainty, financial literacy measures their understanding of financial concepts, and subjective norms indicate social pressure in investment decisions. The findings show that all three factors positively and significantly affect stock investment intentions. Financial literacy enhances confidence in decision-making, while risk tolerance strengthens students' readiness to participate in the stock market. Subjective norms also play a crucial role in shaping investment intentions. This study provides insights for future research on investment behavior in developing countries, particularly Indonesia.