FINANCIAL CHEST – Investment activities are now not only carried out by mature and well-established age groups, but are also much loved by millennials.

Investment is an activity to invest in institutions, entities, or entities, with the aim of getting profits in the future.

Apart from aiming to make a profit, investment activities also have several purposes, such as to buy houses, vehicles, education funds, wedding funds, and so on.

Investment is the right thing to prepare for the future, investment is almost the same as saving, but the advantage of investing is that the money we invest can adjust for inflation and will even increase as asset prices rise from time to time.

So don’t delay to start investing, but before starting investing, it’s a good idea to pay attention to a few things first so you don’t make a wrong move.

What are the things to do before investing? Let’s see the explanation below!

1. Determining Investment Objectives

The first thing to do before planning an investment is to determine your investment goals, on the other hand it aims to make a profit, but everyone’s motivation to invest is different. Setting investment goals keeps you consistent and committed to investing.

2. Know the Risk Profile

Although the main purpose of investment is to make a profit, it does not rule out the possibility of risk.

Investment risk can be caused by interest rates, market price fluctuations, exchange rates, legal and political, and liquidity.

Quoted from IDX, investment risk is an indicator to determine the level of individual tolerance for risk. recognizing your investment risk profile is the same as knowing your own character.

The investment risk profile is divided into three categories, namely:

a. Conservative Type (Risk Averter)

  The conservative type is the type that emphasizes the integrity of the principal value by choosing the type of low-risk instrument, such as money market mutual funds, this instrument is suitable for beginners with short-term financial needs and low risk but still generates returns.

b. Moderate Type

  The moderate type is the type of investor who is very careful in making decisions, the type of instrument that is suitable for the moderate type is fixed and mixed income mutual funds (bonds and money market), this instrument is suitable for investors who have medium-term financial needs with insignificant returns , but the risk is maintained.

c. Aggressive Type (Risk Taker)

An aggressive type of investor is an experienced investor in the capital market world, he really likes challenges and is brave in making decisions.

Investors with the Risk Taker type do not hesitate to invest in high-risk instruments for high returns.

3. Fund Allocation.

After knowing the purpose of the investment and knowing the risk profile, the next important thing to do is allocate funds.

Before planning to invest, make sure the money you use is not ‘cold money’, cold money here does not mean cold money in the truest sense, but money that does not come from emergency funds, basic needs, or funds to pay debts.

For that it is important for you to manage finances, you can start with basic needs first, then you can allocate the rest for investment.

To make it easier, assume your income is in the form of a percentage with a percentage of 100%, you can allocate 50% for main needs such as routine expenses, namely paying for electricity and water, daily needs, paying consumer debt, and others (you can adjust as needed ).

After that, the remaining 50% you can allocate 30% each to pay productive debts, productive debt is debt whose value increases from time to time, such as mortgages and KTA.

And for 20% you can allocate another 10% for insurance/protection and 10% for investment.

4. Company legality research

With the rapid advancement of technology and with increasing public interest in investing, many investment platforms offer the best features, but before investing your money make sure you have checked and re-checked the legality of the company, you can research company information easily through the OJK website. important in the midst of rampant cases of fraudulent investment fraud by offering large profits in a short time and low risk, it must be remembered that investment is a process to achieve goals and a process that requires no short time.

Basically investing as well as making decisions there are always risks that must be borne. Big profits will always be accompanied by high risks and vice versa.

5. Expanding Insights About Investment

To become a reliable investor, you must have good skills and understanding and mastery of financial management, investment psychology, investment strategies, and so on.

If the investment world is examined, it is not only about profit, everyone wants to maximize profits, but the problem is how to deal with losses? The only way is to continue to hone skills and knowledge. In this era of convenience, learning media is very easy to access, there are many articles about investment scattered on search engines, YouTube, platforms, or online courses that you can use to learn investation.

Given the dynamic world of finance, expanding investment knowledge is not only for beginners, even experienced investors still have to learn.

So, for those of you who have started investing early, have you had these five checklists yet? If not, let’s learn more! The desire for investment must start from yourself, don’t invest because you are fomo or just joining in. This is the same as preparing for the future requires process and effort, as well as investing requires strong knowledge, strategy and analysis.

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