Enhancing Rational Investment Decisions: The Impact of Financial Literacy and Experience on Indonesian Retail Investors, Moderated by Overconfidence

This study investigates the influence of financial literacy and investment experience on rational investment decision-making among retail investors in Indonesia, with overconfidence as a moderating variable.A survey was conducted on a sample of 269 individual investors with at least one year of investment experience, and the data were analyzed using structural equation modeling (SEM-PLS).The results reveal that financial literacy and investment experience significantly affect rational investment decision-making.However, overconfidence weakened these relationships, suggesting that excessive confidence can lead to less rational decisions.The findings highlight the importance of promoting financial literacy and learning from experience while controlling overconfidence to enhance rational investment behavior.The study contributes to the literature on behavioral finance and provides practical implications for investors, financial educators, and policymakers in Indonesia.