The Importance Of Understanding Investment For Young People, Experts Say

(L-R), Rikando Somba, CEO/Pimred of Validnews.id, Purbaya Yudhi Sadewa, Chairman of the LPS Board of Commissioners, Yazid Muamar, Financial Expert Ajaib and Evan Kamaratul Insani, Co-Founder of the Shares Sharia Community. (Photo: Special)

JAKARTA - Investment has become the most popular word lately. This word seems to be magic, especially for young people, to achieve financial independence.

However, according to the Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadewa, this euphoria in investing must be accompanied by sufficient knowledge for Generation Z children as novice investors. Do not let this generation that is attached to gadgets and the digital world only invest because they join in, without having knowledge.

"If we don't teach them, they can give up investing. This forum is useful for increasing literacy in the community. Equipping themselves to succeed in the financial market is important," said Purbaya in a hybrid seminar entitled "Financial Independence in the Digital Era" initiated by Validnews.id in Jakarta, Thursday, August 18th.

He stated that young people today have a tendency to adopt digital media, especially social media, in making decisions related to finance and investment. On the other hand, young people also have a tendency to want to get quick profits in investing.

"The younger generation tends to be tempted by high-risk investments. The risks are not studied at all, so flexing is sold out," he said.

Based on data from the Indonesian Central Securities Depository (KSEI), in 2018, there were only 1.6 million capital market investors, in July 2022, the number had reached 9.3 million. In the same period, investors in stocks reached 4.1 million, mutual funds 8.6 million and government securities (SBN) as many as 736.4 thousand.

On the one hand, this enthusiasm for investing, he continued, is something positive for the economy. But on the other hand, the rampant interest in investing is often not accompanied by sufficient knowledge.

"Investment interest in the capital market has increased impressively, whereas since decades ago there has been little increase. Financial inclusion and literacy are increasing, but there is a gap between inclusion and literacy. In addition, there is also an inclusion and literacy gap between regions in Indonesia, " he added.

He continued, demographically, investors in Indonesia are dominated by the younger generation (under the age of 30) and the highest educational background is SMA/equivalent. Based on age group, KSEI data shows that investors under the age of 30 reached 59.43 percent and controlled Rp54.79 trillion.

At such ages, most of the existing investors are still in the early stages of investing. No wonder the investment portion is still not too large allocated from the income received.

Still according to KSEI data, based on income, around 49.54 percent of investors are occupied by investors with an income of IDR 10-100 million with a total fund of IDR 179.9 trillion. Followed by investors with income below IDR 10 million as much as 38.17 percent with a total investment of IDR 170.9 trillion.

Purbaya suggested, before actually entering the investment world, young people should be able to do a profiling on themselves. They can start investing after meeting basic needs, emergency funds and insurance.

"The key is patience. Don't assume that investment can make you rich immediately. Don't go into debt because the interest on the loan is certain, while the investment return is uncertain," said the former chief economist of Danareksa Sekuritas.

Future

On the same occasion, Yazid Muamar Financial Expert Ajaib Sekuritas said, to overcome inflation and future uncertainty, one should invest as much as possible.

"Well, the capital market can be an alternative to adding assets to overcome future uncertainties," he said.

However, he reminded, for novice investors and students, investing in financial knowledge is important before jumping into the investment world.

"If you want to try, use small money first, take blue chip stocks, after working and earning bigger income, then they can be managed in a more manageable way," he said.

According to him, investment is only divided into two terms, long term and short term.

"In the short term, we have to be consistent. We have to learn technical. We have to be able to read trends. Take (stocks) at the support level. We have to know the support and resistance lines," he said.

As a security that prioritizes digital platforms, Ajaib, said Yazid, his party asks investors to adhere to three principles, namely Understand, Own and Monitor.

"Remember, the capital market is dynamic. Investment is not instant, the orientation is long term and the effort needs to be done regularly and routinely. We always educate on social media every 8.30 hours before the market opens," he said.

Financial Independence

Similarly, Evan Kamaratul Insani, Co-Founder of the Shares Syariah Community, said that, in truth, investment should be seen as a way to prosper and be financially independent for everyone.

"Teachers, farmers, fishermen can be investors. The instruments and tools are already available," he exclaimed.

He said that financial independence itself has a different definition and level for each person. Because it can not imitate the success experienced by someone.

"For some people, having abundant cash and wealth is financial freedom. For some people, having free time, time with family, being able to go on vacation is financial freedom. It is futile to compare with others," he said.

Therefore, according to Evan, before trying to invest, at least novice investors must master three sciences about money. Namely, the science of making money, the science of managing money and the science of investing money.

"To invest, we need to find money first, after that we are able to manage finances to separate needs from money that can be saved or invested. After that, start investing with sufficient knowledge," he said.

He also reminded the younger generation and novice investors to determine the financial goals they want to achieve in investing. Then calculate the estimated time needed for each financial goal. Finally, map all assets owned, such as gold, deposits, mutual funds, stocks, businesses, P2P, bonds/securities.

"Investing methods only contribute a little to success, the important thing is knowledge," he said.