Tips For Starting Mutual Fund Investments For Beginners

JAKARTA - The world is still shrouded by the COVID-19 pandemic that has yet to end. This also encourages people to look for investment instruments for their assets so that they are not affected and are not eroded by circumstances. However, if you don't have enough funds to start investing, you can choose mutual funds.

Mutual funds are investment instruments that consist of various assets in them, such as stocks, bonds or debt securities, and deposits. Mutual funds can also be purchased with affordable capital starting at IDR 100,000.

In practice, mutual funds collect money from investors or investors, the funds raised will be invested in a portfolio of securities by the Investment Manager (MI), so that their value grows.

For example, you don't need tens of millions of capital to start investing in mutual funds. The system is simple, you only need to put a certain amount of money into buying mutual funds, choose the type of mutual fund you want and then the investment manager will manage your investment.

Quoted from various sources, Tuesday, March 23, what needs to be understood if you want to start a mutual fund investment is that the return or profit generated does not depend on the size of the initial purchase value of the investor.

This means that with minimal capital you can invest in mutual funds and get a higher potential profit compared to savings products or bank deposits.

As an investment instrument, mutual funds also carry risks so that their value can go up or down in the short term. Even so, compared to other investment instruments, the risk is not too high.

However, there is no need to worry because this product is official and everything related to it such as investment managers, custodian banks and selling agents is supervised by the Financial Services Authority (OJK).

If you are interested in starting mutual fund investing, consider the following tips:

1. Determine the purpose and duration of the investment

Before you start buying mutual funds, first determine what your investment goals are. For example, for children's education costs, buying a dream house in the future, traveling costs to dream countries, or investing for pension funds.

Investment objectives are important to start investing. Because, this goal will be closely related to the investment period and the type of mutual fund that is right for you. Besides that, it can also be used as your motivation.

Mutual fund investing takes varying lengths of time. Some are for less than a year, 1-3 years, 3-5 years, and more than 5 years. For a period of less than a year, you should choose money market mutual funds.

Meanwhile, for 1-3 years of investment, you can choose a fixed income mutual fund. Meanwhile, for a period of 3-5 years, use mixed mutual funds.

Finally, for those of you who want a long-term investment, which is more than 5 years, use equity funds.

2. Learn the types of mutual funds

After determining your investment goals, next is to learn the types of mutual funds. There are four types of mutual funds that you can choose to invest money in this relatively safe instrument.

First, money market funds. Where all money is placed in deposits, in Bank Indonesia Certificates (SBI), and also in bonds. The maturity date of this money market mutual fund is less than one year. This type of mutual fund also tends to be safer. But again, because the risk is small, the benefits are also relatively smaller.

Second, fixed income mutual funds. Where funds are allocated to bonds of at least 80 percent. The profits obtained are even higher and can reach more than 10 percent per year. This means that this mutual fund has a lower risk than equity and mixed mutual funds.

Third, mixed mutual funds. This mutual fund uses various regulations from the previous types. It is very risky but if it is successful then the mutual fund will generate high and impressive returns.

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Of course, even though you produce in small or large amounts, you as a beginner must be careful in making decisions and doing mutual funds so as not to lose.

Finally, index mutual funds. Where this type is similar to stocks because this instrument can be traded on an exchange called an ETF (Exchange Traded Fund) and the price can fluctuate like stocks. However, these mutual funds usually contain certain indexes that are managed passively, meaning that they do not buy and sell on the exchange unless someone subscribes to a new or redemption.

3. See historical performance

After determining the appropriate type of mutual fund. Next is to look at the performance of the selected mutual fund. Performance can be reflected based on historical data from a mutual fund, such as movements in Net Asset Value (NAV), returns, and risks. The longer the historical data used to evaluate, the better judgment will be before making an investment decision.

Mutual fund performance evaluation with good historical data is a minimum of five years. If the performance of a mutual fund over the past five years has been good and only suffered small losses during the crisis, it means that the Investment Manager who manages the product is indeed reliable and the mutual fund is worth considering.

If you choose a money market mutual fund, you can say that good performance is the increase above the percentage increase in the Composite Stock Price Index (IHSG) and other similar mutual funds (benchmark index for similar mutual funds).

Even so, things that also need to be considered are that the past performance of a mutual fund is not a reflection or certainty of future performance, but only as a tool to make considerations before you decide to invest in mutual funds.

You can also compare the historical performance of various similar mutual funds in Indonesia. This comparison can be seen based on a certain period of time according to our needs

4. Product selection and investment manager

Before deciding to buy a mutual fund, you must know not only the type of mutual fund but also the contents of the portfolio that make up the mutual fund. In addition, you also need to know the investment manager who manages the mutual fund product.

However, you also need to check the licensing of your mutual fund products and investment manager whether they are registered with the OJK. If in doubt, you have the right to decline the offer to invest. Checking this permit is also a form of preventive effort so that you are not deceived by fraudulent or fake investment forms.

Fake investments are everywhere, they do not have a license because they do not meet the standards and requirements in managing a clean and healthy investment. The main characteristic of investing in fraudulent mutual funds is that they usually offer a very large investment return. However, it could be a big risk.

All information related to a mutual fund product, from investment managers, custodian banks, to investment policies, has been included in the mutual fund prospectus. In addition, there is also a fund fact sheet, which is updated monthly, containing information on managed funds, portfolio content, and comparison of mutual fund performance.

5. Select an investment platform

After determining the right type of mutual fund, the next step is to choose an online mutual fund platform that sells a variety of mutual fund products from many investment managers, so there are many choices.

Examples of online mutual fund supermarket platforms include Bareksa.com, Ipotfund (PT Indo Premier Securities), Bukalapak, Bibit, and Tokopedia.

6. Discipline

After learning all about mutual funds and choosing a platform to start investing in, the final step is discipline. Because the most important thing in investing is discipline.

If you have set goals, we must regularly set aside money according to your initial plan. Discipline in the long term does look difficult, but if you get used to it, it becomes light and not burdensome.

In order to achieve whatever your financial goals are, discipline must be applied. Setting aside salary money at the beginning of the month to buy mutual funds is one strategy to be disciplined.