Having a personal investment in the financial market has now become a productive lifestyle among young people or first jobbers. The old view that investment can only be done by people of mature age is no longer relevant. This can be seen from the demographic data of investors in Indonesia, which is increasingly dominated by the young millennial age group.
Based on
data from the Indonesian Central Securities Depository (KSEI), it was noted
that the number of investors or Single Investor Identification (SID) in the
domestic capital market until the end of 2020 reached 3.87 million investors.
This figure increased 56% compared to the position at the end of 2019. Of the
number of investors, almost half of them were under 30 years old, while the age
range of 31-40 years reached 25% of the total number of domestic investors in
2020. In other words, 70% of market investors Indonesia's capital is young
people.
If we are
unanimous about wanting to start investing in the capital market, try following
the guidelines for how to invest in the following financial markets:
Guide to Investing
1. Understand Investment Concepts and Risks
Insurance is
basically the easiest financial risk management mechanism. Anything that poses
a risk to a person's financial condition should be insured. Although not
everything can be insured, there are at least two types of insurance that are
very important to have; namely life insurance and health insurance.
For young
people, these two types of protection are often ignored because they feel that
the risk of getting sick and dying is not too big. Mental protection and health
are sometimes considered as the needs of mature age groups who are already
married. Of course, this assumption is inaccurate, because no one can predict
the risk of getting sick or dying.
So, when
talking about which insurance is more important, then the answer is, both
buying life protection and buying health protection are equally important.
However, if you are still in a situation where you have to prioritize spending
premiums, you can consider options based on the following guidelines.
2. Have Clear Financial Goals
The next
step if you want to start investing is to list the financial goals you want to
achieve through investing. Financial goals are simply defined as a condition
that you want to achieve in relation to a certain financial fund target for a
certain period. By having financial goals, the way you invest can be more
targeted because you have clear targets and strategies.
You can also
divide your financial goals according to the target time. First, short-term
financial goals are financial goals that you want to achieve in less than 3
years. For example: homecoming and year-end vacation funds, first house down
payment funds, and so on. Second, medium-term financial goals, namely the
target funds that you want to collect in the range of 3-5 years. For example,
marriage funds in 3 years, postgraduate school funds, and others. Third,
long-term financial goals, namely target funds to be achieved in a span of more
than 5 years. This includes pension funds, children's education funds at
universities, and so on.
From each of
these financial goals, determine the target funds that we want to realize. For
example, a marriage fund in 3 years is Rp. 100 million, a down payment for the
first house is Rp. 150 million, and so on.
3. Determine the Investment Instrument
After having financial goals that have been categorized based on the timeframe for achievement, then you can begin to determine the choice of the right investment instrument according to the time horizon of your financial goals and risk profile. The time horizon is very important because it will affect the assessment of the risk of an investment instrument and its effectiveness in helping you achieve the predetermined target of funds. For example, if your financial goal is to prepare a marriage fund in 3 years of IDR 100 million, then the right investment choice is an instrument with a low-to-medium risk level such as money market mutual funds and fixed income mutual funds. Stocks are not recommended for 3-year financial purposes because the risk of price fluctuations is too high in the short term.
When
referring to risk grouping based on the time horizon, then you can use the
following reference.
·
Short
term financial goals < 3 years
·
Medium
term financial goals 3-5 years
·
Long-term
financial goals above 5 years
In addition
to considering the time horizon, in choosing an investment instrument, make
sure you pay attention to your risk profile as an investor. How to check it?
You can fill out the risk filling sheet every time you want to start investing.
There are 3 categories of risk profile, namely conservative, moderate and
aggressive investors.
Conservative
investors are characterized by the fact that they like stable investments,
don't want the principal investment (initial capital) to decrease, and they
don't like fluctuations in investment value. Then, moderate investors are
investors who can still accept price fluctuations, hope that their initial
capital will not run out completely, and are quite satisfied if their
investments grow beyond the inflation rate and bank deposits. Finally,
aggressive investors, namely investors who are ready to take the risk of losing
their investment capital, are comfortable with sharp price fluctuations because
they want their investment to grow many times higher than deposit interest
(risk free rate).
4. Open an Investment Account
After having
a clear plan of financial goals and a choice of investment instruments, it's
time to execute the plan. To invest in the capital market, you are required to
have an investment account. How to open an investment account is not difficult.
You can do this through the right financial institution such as a securities
company if you want to invest in stocks, or an investment manager company if
you want to start investing in mutual funds online, and so on.
Usually what
is needed to open an investment account is a personal identity card, a Taxpayer
Identification Number (NPWP), a bank account number, filling out an initial
investment form, and other requirements that you can check at the relevant
financial institution. Currently starting to invest is easier with the
existence of financial technology (fintech) companies that allow you to start
just from a gadget without having to go to the physical office of the company
concerned.
Oh, yes,
investment capital is also not expensive, you know. You can start investing
with minimal capital. For example, a mutual fund investment can start with just
IDR 100,000. Stock investment is also not expensive, which is enough to buy 1
lot (100 shares) as a start.
5. Execute Disciplined Investment
In
investing, you need to have the right strategy. Strategy helps you optimize the
capital you have in order to achieve investment targets according to financial
goals. For example, for investing in equity funds, you choose the dollar cost
averaging (DCA) strategy or monthly investments because you do not have
specific time to monitor daily stock market movements. There is also a value
investing strategy in stock investment, and other strategies that can be chosen
according to your convenience and financial goals.
Don't forget
to evaluate your investment performance regularly at least every semester. You
can check the performance of investment returns reports that are regularly sent
by securities or related investment managers.
The five
tips on how to invest above can help you get started with investing.
Before
starting to invest, it would be better if you start by having financial
readiness. Some indicators of financial readiness include: financial cash flow
conditions are surplus or not in deficit, controlled debt installments do not
exceed 30% of the value of regular monthly income, and already have an
emergency fund of at least 30% of the ideal emergency fund target value.
Likewise,
the ownership of personal insurance, try to meet the needs of basic insurance
such as health insurance and life insurance in order to protect financial
conditions from various life risks. We can also choose insurance that is
equipped with investment benefits, such as Manulife Investment Protector
products or others which can be seen here.
Now, if the
readiness indicators have been met, we can prepare the next investment step. On
the other hand, if it turns out that your financial condition has not met your
readiness, it is better to focus on improving it so that later you can start
investing with a healthy financial condition.