Government Needs To Encourage Young People To Invest In The Capital Market For Retirement Funds

Indonesian capital market (Photo: dock. Antara)

JAKARTA - The Institute for Development of Economics and Finance (Indef) assesses that the government needs to encourage generation Z and millennials to invest in the capital market to prepare for their retirement.

"The government needs to encourage the capital market to prepare young people to have pension funds," said Head of the Sharia Economic Program Indef Fauziah Rizki Yuniarti quoting Antara.

He explained that the capital market, including the Islamic capital market, provides more benefits in preparing the younger generation for their pension funds.

According to him, conventional financial products in banks, such as deposits, are not sufficient to meet their retirement needs. The reason is, the return on these products is often affected by inflation and the interest rate of Bank Indonesia (BI) or BI-rate.

"Meanwhile, if you put it in the capital market, that's one of the best investment ways to retire, because the return is high," he said.

Fauziah agrees that investment in the capital market is high risk high return. Even so, he considered investing in the capital market to be a better choice as long as the risk was measurable and manageable.

"Maybe if you are 40-60 years old, you are late to enter the capital market now, because investment in the capital market is long term. But, for gen Z and millennials, we need to encourage them to enter the capital market," he said.

In addition, Fauziah also advised the government to encourage the endors of the Islamic capital market by generation Z and millennials. This is because the two generations use a lot of sukuk products published by the government.

He hopes that the government, including during the leadership of future presidential candidates, can pay more attention to boosting the capital market, both the general capital market and the Islamic capital market.