Which is a Better Investment: Risk-Free Asset or Stocks?

The purpose of this research was to understand whether the investment in the stock market as well as its sectors produces more return compared to the investment in risk-free asset. The questions arise due to many investors failed to gain more wealth through stock investment especially in Indonesia Stock Exchange. To be able to answer the research questions, risk-free asset and all of the indexes data were gathered and analyzed using one sample t-test to compare its indexes return and the risk-free asset return. This research found that the hypothesis stating that market index did not produce better return compared to the risk-free asset was supported. Moreover, the hypothesis stating that all of sector indexes did not produce better return compared to the risk-free asset was also being supported. As a result, investors who want to invest their money in the Indonesia Stock Exchange must be very careful in choosing which assets need to be collected as well as when it will be bought or sold to ensure they gain higher benefits.