Often many are misguided about investment. Many still think that investment is a condition where someone saves a large amount of money. Whereas investment can be in the form of anything as long as it has a selling value that continues to increase over time.
The importance of education about investment still needs to be expanded and deepened. People tend to still feel insecure to save their money in different forms of investment. The majority of people still rely on savings only.
The mindset about investing is a complicated thing to change because actually having an investment is one of the things that is very profitable for you in the long term. For this reason, in this article, we will discuss:
Know What is Investment
The definition of investment is the investment of assets or funds made by a company or individual within a certain period of time in order to get a greater return in the future. The investment system requires that you set aside a portion of your income to be stored in another form so that you can get additional assets or income from your investment results. In simple terms, you intend to earn more in the future so that you can send your children to school, to buy your dream home.
When compared to developed countries, at first the knowledge and desire of the people in Indonesia regarding investment was still relatively low. With the low interest in investing, many people think that investment is only for people with large incomes. However, now people are finally starting to realize the importance of investing.
Property Investment
From year to year the development of investment in Indonesia continues to increase quite well. This increase is followed by the easier it is for anyone to invest. In addition, the increasing trend of economic growth makes everyone want to invest for their own interests.
Investments are divided into 2 categories, namely short-term investments and long-term investments. Both have differences that can be seen from the time period:
Short Term Investment
One type of investment with a short period and has a return in a period of less than 12 months. Short-term investments are more often referred to as temporary investments to secure your finances until new or more profitable investment opportunities arise.
Short-term investments have 2 main characteristics. First, short-term investments must be of high quality. Second, the investment must be liquid so that you can easily resell it. Although it looks tempting, short-term investments only have a relatively lower return value.
Long term investment
In contrast to the short term, the type of long term investment takes a long time to generate returns. Generally it will take you a minimum of years before you can resell it and make a profit for you.
Even though it takes you a long time to generate returns, investing in the long term will generally yield much better returns. You also have to be careful because long-term investments carry a much higher risk than short-term ones.
It is important for you to have an investment
Investment becomes very important for you if you have a target within the timeframe you have set. Even though the investment capital you spend is not much, it can still provide various benefits for you. Below will be discussed about what are the benefits of investing:
Financial Freedom
One of the benefits of having an investment is that you can earn passive income. You can get this passive income from the return on investment. By earning passive income, you don’t have to pursue a career so you can live a calm and comfortable life.
Increase Wealth and Asset Value
The purpose of the next investment is to increase the value of your wealth and assets. This value can be increased because of the interest rates offered. The value of these assets can also increase if you invest in the long term because there will be a compounding effect.
The compounding effect is a revolving interest that makes your investment a lasting profit. This effect is also known as interest bearing and can continue to increase the asset value of the investment that is being made by you.
Protecting Financial Conditions from Inflation
Inflation is a condition when the prices of goods and services continue to increase. Based on calculations, Indonesia has an average inflation rate of 8.2{d50e0571c5be256f2244e3785f87da3cc3547cbc1b0d530766df4d76d0d7aa90} per year. If you only save money in the bank, you will not get maximum results. The bank only provides a maximum return of up to 1.5{d50e0571c5be256f2244e3785f87da3cc3547cbc1b0d530766df4d76d0d7aa90} per year.
Meeting Long-Term Personal Needs
By investing, you can meet your long-term needs. The investment you have made can help you in the future. Investments can make your dreams come true, such as the dream of going for Umrah or having your dream home. Make sure that the investment you have is long term so that the asset is safe from decline in value.
What You Should Pay Attention To About Investment
Each investment that you run certainly has different risks. The word risk refers to the potential risk of each investment product. If the benefits are large, the risks are also great. When someone is able to control the investment well, the risk will be reduced. Investors in the capital market must be aware that every investment made has a close relationship between the level of return and the existing risk.
Liquidity risk is one of the risks of your investment product which is not easy to trade. In theory, the ease of selling is inversely proportional to the payoff. For example, if you invest in a profitable stock, it will be easier to trade compared to a company’s stock that is experiencing a loss.