Investment is one way to manage finances and get future profits. Many people want to start investing, but are still confused about what investing is, its types, objectives, risks, and how to start investing.
If you are one of them, don’t worry, this article will discuss in full the ins and outs of investing, starting from the types of investments that exist, the purpose of the investment, to the risks that may occur.
Apart from that, the following article will also provide some examples of investments that can inspire you to start investing. Come on , see this article until it’s finished and find the best way to start the right investment!
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What is Investment?
Investment in general can be interpreted as managing a number of funds by buying an investment instrument, such as stocks, bonds, property, mutual funds, gold, and so on.
The goal is to earn profits in the future. In investing, you need to invest funds for a certain period of time and are willing to take on the risks involved.
Choosing the right type of investment is very important to maximize profits and minimize risks. It is important to learn more about the types of investments available and determine your risk profile and financial goals before deciding to invest.
Always remember that investing also has risks, so it needs to be done carefully and taking into account the factors that exist.
Come on , start to learn more about investing and find out which type of investment suits your needs and financial capabilities!
Types of Investment and Examples You Need to Know
There are various types of investments available, and here is a complete discussion of the types of investments that are popular among investors and that you can try.
1. Stock Investment
Stocks are the most common and popular investment instrument in the capital market. In stock investing, you need to buy shares of a company to become a shareholder.
The advantages of shares are capital gains , namely the increase in share prices from time to time, as well as dividends, namely the distribution of company profits to shareholders.
An example of a stock investment is investing in companies listed on the Indonesian Stock Exchange. Investors can purchase shares through securities firms or stock brokers. Examples of companies that are popular in Indonesia are Bank Central Asia (BCA), Telkom Indonesia, or Unilever Indonesia.
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2. Bond Investment
Bonds are investment instruments consisting of debt securities issued by companies or governments. In bond investment, you need to buy available debt securities and receive interest from the company or government that issued the bonds.
An example of a bond investment is the Retail Savings Bond (SBR) series SBR012. Retail State Sukuk (SR) SR018 series, Savings Sukuk (ST) ST010 series, Retail State Bonds (ORI) ORI023 series, Retail State Sukuk (SR) SR019 series, Indonesian Retail Bonds (ORI) ORI024 series. Savings Sukuk (ST) series ST011, and many more.
3. Property Investment
Property or investment in real estate such as houses, apartments or land is also an investment choice. The advantages of property are capital gains , namely the increase in property prices over time, and passive income , namely income from property rental fees if rented out.
Examples of property investments can be in the form of residential houses, apartments, shop houses, vacant land, villas, condominiums, to office buildings.
4. Mutual Fund Investment
Mutual funds are investments managed by fund managers and consist of stocks, bonds, or a mixture of the two. The advantages of mutual funds are portfolio diversification carried out by investment managers and high liquidity.
Examples of mutual fund investments that are quite popular and reliable include the AVRIST LIQUID FUND, the Sucorinvest Money Market Fund, the Sucorinvest Sharia Equity Fund, BATAVIA CEMERLANG CASH FUND, and so on.
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5. Investment in Gold or Precious Metals
Investments in gold and precious metals are investment options that are in great demand because they tend to be stable in price and value. The advantage of this investment is capital gain, namely the increase in gold prices over time.
Investments in gold or precious metals can usually be obtained through companies that produce metals, such as ANTAM, UBS, Lotus Archi, PAMP, and Galeri24.
6. Forex Investment
Forex investment is an investment in foreign exchange. In this investment, you are required to buy foreign currency and sell it back when the price of the currency rises. The advantage of investing in forex is the profit from the difference between the selling price and the buying price of foreign currency.
7. Cryptocurrency
Cryptocurrencies are investments in the form of digital currencies such as Bitcoin and Ethereum. Cryptocurrency is an investment choice because prices tend to rise from time to time. However, cryptocurrency investment also has a fairly high risk.
Some examples of cryptocurrency investments include Bitcoin, Litecoin, Dogecoin, Ethereum, Binance Coin, Polygon, Cardano, and many others.
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Investment Objectives That Need Attention
The investment objective is not only limited to profit, but also considers financial needs and long-term goals. Here are some investment goals that need to be considered before starting to become an investor.
1. Increasing Profits
The most common investment objective is to increase profits. Investments in stocks, mutual funds and property are popular types of investment because they provide large potential returns. However, keep in mind that profits cannot be guaranteed, so it is necessary to consider the risks involved.
2. Protecting Asset Value
Investments can also be made to protect the value of assets from inflation. When inflation occurs, the prices of goods and services tend to rise so that the purchasing power of money decreases. Investments in gold, bonds and mutual funds can help protect asset values from inflation.
3. Building a Pension Fund
Another long term investment goal is to build a retirement fund. Investments in mutual funds, property, or stocks can help build a strong investment portfolio and provide enough passive income to pay for life when you enter retirement.
4. Funding Children’s Education
Investments can also be made to finance children’s education. Investing in mutual funds, stocks or bonds can help raise enough funds for your child’s future education costs.
5. Earning Passive Income
Investments can also be made to earn passive income. Investments in dividend-paying property or stocks can provide ample passive income.
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Possible Investment Risks
Investment is one way to manage finances and gain profits in the future. However, like any other financial activity, investing also has risks that need to be considered. In this article, we will discuss in full the possible investment risks.
1. Market Risk
Market risk is the risk associated with market fluctuations and can affect the price of stocks, bonds or mutual funds. Economic and political changes, as well as global market conditions, can affect the performance of your investment.
2. Credit Risk
Credit risk is the risk associated with default on the part of the party issuing the bond or loan. If the party fails to pay the debt, then your investment will be at risk of being lost or experiencing a loss.
3. Inflation Risk
Inflation risk is the risk associated with a decrease in the purchasing power of money due to rising prices of goods and services. If inflation occurs, the value of your investment can decrease because stock, bond or property prices do not increase in proportion to the increase in the price of goods and services.
4. Liquidity Risk
Liquidity risk is the risk associated with the inability to sell an investment in a short time or at a good price. If your investment is not liquid, it will be difficult to make the right decision in an emergency situation or urgent need for funds.
5. Geopolitical Risk
Geopolitical risk is the risk associated with the political and security situation of a country or region that may affect investment performance. International conflicts, changes in government policies, or social unrest can affect the prices of stocks, bonds, or property in a country or region.
How to invest for beginners that are easy to understand
For beginners, investing can seem complex and difficult to understand. However, investing can actually be done easily and simply. Here are some easy-to-understand ways of investing for beginners. Listen, come on !
1. Define Investment Goals
Before deciding to invest, first determine your investment goals. Do you want to build a retirement fund, pay for your children’s education, or just want to increase your wealth? By determining your investment goals, you can choose the right investment instrument and set an effective investment strategy.
2. Do your research first
Before deciding to invest, be sure to do some research first. Learn about the available investment instruments and try to understand the risks and potential rewards associated with these instruments.
You can read books or articles about investing, or attend investment seminars and workshops held by securities companies or investment managers.
3. Start with a Small Investment
For beginners, start with a small investment first. Don’t be too hasty to invest all your money in one investment instrument. Start with a small investment and add it gradually according to your financial capabilities.
4. Choose the Right Investment Instrument
Choose the right investment instrument according to your risk profile and financial goals. If you want a low-risk investment, bonds or money market mutual funds can be the right choice.
However, if you want an investment with greater profit potential, then stocks or property can be the right choice.
5. Investment Portfolio Diversification
Diversify your investment portfolio by choosing several different investment instruments. Diversification can help minimize risk and maximize profit potential. Try to choose different investment instruments, such as stocks, bonds or mutual funds.
6. Use the Services of a Securities Company or Investment Manager
If you still feel confused or don’t have time to manage your own investments, use the services of a securities company or investment manager. A securities company or investment manager can help you choose the right investment instrument and set up an effective investment strategy.
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In this article, we have discussed the ins and outs of investing, starting from what investment is, types of investment, investment objectives, to the risks that may occur when investing.
Investment is a good way to manage finances and get future profits. However, it is important to understand the types of investments that exist, consider your financial goals, and understand the risks associated with each investment instrument before starting to invest.
Don’t forget to do your research first and choose the right investment instrument according to your risk profile and financial goals. Always remember to diversify your investment portfolio and invest carefully.
In this way, you can minimize risks and maximize the potential return on your investment. Good luck, huh !