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 ondata from the Indonesian Central Securities Depository (KSEI), it was notedthat the number of investors or Single Investor Identification (SID) in thedomestic 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 thenumber of investors, almost half of them were under 30 years old, while the agerange of 31-40 years reached 25% of the total number of domestic investors in2020. In other words, 70% of market investors Indonesia's capital is youngpeople.

If we areunanimous about wanting to start investing in the capital market, try followingthe guidelines for how to invest in the following financial markets:

 

Guide toInvesting

1.Understand Investment Concepts and Risks

Insurance isbasically the easiest financial risk management mechanism. Anything that posesa risk to a person's financial condition should be insured. Although noteverything can be insured, there are at least two types of insurance that arevery important to have; namely life insurance and health insurance.

For youngpeople, these two types of protection are often ignored because they feel thatthe risk of getting sick and dying is not too big. Mental protection and healthare sometimes considered as the needs of mature age groups who are alreadymarried. Of course, this assumption is inaccurate, because no one can predictthe risk of getting sick or dying.

So, whentalking about which insurance is more important, then the answer is, bothbuying life protection and buying health protection are equally important.However, if you are still in a situation where you have to prioritize spendingpremiums, you can consider options based on the following guidelines.

 

2. HaveClear Financial Goals

The nextstep if you want to start investing is to list the financial goals you want toachieve through investing. Financial goals are simply defined as a conditionthat you want to achieve in relation to a certain financial fund target for acertain period. By having financial goals, the way you invest can be moretargeted because you have clear targets and strategies.

You can alsodivide your financial goals according to the target time. First, short-termfinancial goals are financial goals that you want to achieve in less than 3years. For example: homecoming and year-end vacation funds, first house downpayment funds, and so on. Second, medium-term financial goals, namely thetarget 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 morethan 5 years. This includes pension funds, children's education funds atuniversities, and so on.

From each ofthese financial goals, determine the target funds that we want to realize. Forexample, a marriage fund in 3 years is Rp. 100 million, a down payment for thefirst house is Rp. 150 million, and so on.

 

3.Determine the Investment Instrument

After havingfinancial goals that have been categorized based on the timeframe forachievement, then you can begin to determine the choice of the right investmentinstrument according to the time horizon of your financial goals and riskprofile. The time horizon is very important because it will affect theassessment of the risk of an investment instrument and its effectiveness in helpingyou achieve the predetermined target of funds. For example, if your financialgoal is to prepare a marriage fund in 3 years of IDR 100 million, then theright investment choice is an instrument with a low-to-medium risk level suchas money market mutual funds and fixed income mutual funds. Stocks are notrecommended for 3-year financial purposes because the risk of pricefluctuations is too high in the short term.

Whenreferring to risk grouping based on the time horizon, then you can use thefollowing reference.

·        Shortterm financial goals < 3 years

·        Mediumterm financial goals 3-5 years

·        Long-termfinancial goals above 5 years

In additionto considering the time horizon, in choosing an investment instrument, makesure 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 andaggressive investors.

Conservativeinvestors are characterized by the fact that they like stable investments,don't want the principal investment (initial capital) to decrease, and theydon't like fluctuations in investment value. Then, moderate investors areinvestors who can still accept price fluctuations, hope that their initialcapital will not run out completely, and are quite satisfied if theirinvestments grow beyond the inflation rate and bank deposits. Finally,aggressive investors, namely investors who are ready to take the risk of losingtheir investment capital, are comfortable with sharp price fluctuations becausethey want their investment to grow many times higher than deposit interest(risk free rate).

4. Openan Investment Account

After havinga clear plan of financial goals and a choice of investment instruments, it'stime to execute the plan. To invest in the capital market, you are required tohave an investment account. How to open an investment account is not difficult.You can do this through the right financial institution such as a securitiescompany if you want to invest in stocks, or an investment manager company ifyou want to start investing in mutual funds online, and so on.

Usually whatis needed to open an investment account is a personal identity card, a TaxpayerIdentification Number (NPWP), a bank account number, filling out an initialinvestment form, and other requirements that you can check at the relevantfinancial institution. Currently starting to invest is easier with theexistence of financial technology (fintech) companies that allow you to startjust from a gadget without having to go to the physical office of the companyconcerned.

 

Oh, yes,investment capital is also not expensive, you know. You can start investingwith minimal capital. For example, a mutual fund investment can start with justIDR 100,000. Stock investment is also not expensive, which is enough to buy 1lot (100 shares) as a start.

 

5.Execute Disciplined Investment

Ininvesting, you need to have the right strategy. Strategy helps you optimize thecapital you have in order to achieve investment targets according to financialgoals. For example, for investing in equity funds, you choose the dollar costaveraging (DCA) strategy or monthly investments because you do not havespecific time to monitor daily stock market movements. There is also a valueinvesting strategy in stock investment, and other strategies that can be chosenaccording to your convenience and financial goals.

Don't forgetto evaluate your investment performance regularly at least every semester. Youcan check the performance of investment returns reports that are regularly sentby securities or related investment managers.

The fivetips on how to invest above can help you get started with investing.

Beforestarting to invest, it would be better if you start by having financialreadiness. Some indicators of financial readiness include: financial cash flowconditions are surplus or not in deficit, controlled debt installments do notexceed 30% of the value of regular monthly income, and already have anemergency 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 insurancesuch as health insurance and life insurance in order to protect financialconditions from various life risks. We can also choose insurance that isequipped with investment benefits, such as Manulife Investment Protectorproducts or others which can be seen here.

Now, if thereadiness indicators have been met, we can prepare the next investment step. Onthe other hand, if it turns out that your financial condition has not met yourreadiness, it is better to focus on improving it so that later you can startinvesting with a healthy financial condition.