Indonesian interest in learning investment has become one of the most popular search topics since the pandemic began a year ago. The uncertain situation has prompted Indonesians to be more proactive in seeking and educating themselves about financial services and safe investment options. This is reflected on Google’s Year in Search 2020 report.

According to Google, there is a significant growth of interest in learning and using online banking solutions. At least, there was a surge in searches reaching 140 percent for “online account opening” searches, 70 percent for “online savings” searches, and 20 percent for topics on how to register for mobile banking.

Meanwhile, information related to how to manage finances has also increased. It is readily apparent from the increase in topic searches for “emergency funds” and “saving tips”, which increased to 140 percent.

On the other hand, the topic of looking for safe and secure investment options is also increasing. Searches for keywords in “interest rates on deposits” rose 10 percent, keywords “stocks” rose 25 percent, keywords “buy gold online” rose 85 percent, keywords “IHSG” rose 90 percent, and the highest is the keyword “reksa dana (mutual funds)” which jumped up to 210 percent.

In this article, we will discuss three things; the importance of investing, the benefits of investing early on, and the investment options in this digital era.

 

Why is Investment Important?

 

The COVID-19 pandemic has succeeded in disrupting the mindset of the Indonesian people in financial planning, just like how technology has disrupted many industrial sectors. Now, many people are aware of the importance of financial resilience to deal with unexpected events in the future so that various important moments in life are not going to be missed.

In life, a person must have life goals to be achieved and will meet many important events. Some of these events, for example, are college, marriage, the birth of their first child, children entering school, and retirement. On the other hand, other things can become small targets such as the latest gadgets, vacations to other countries, or buying rare collectibles to satisfy hobbies.

All these things are not achievable without hard work and financial planning. In financial planning, of course, the right investment strategy can provide many benefits. Whether it is for yourself, as well as a wider scope such as family, friendship, and indirectly contributing to the country.

By investing, we are preparing ourselves to face a future full of uncertainty, practicing self-discipline to achieve goals, and indirectly helping move the wheels of the country’s economic growth through investing in a company. It will be even better if we learn from the beginning of adulthood in our lives.

Investment is not a new thing in Indonesia. Referring to Indonesia Dictionary, investment is the practice of putting money or capital in a company or project to make a profit. In practice, this activity has occurred since the colonial period through the 1870 Agrarian Law, which became the entry point for foreign capital in the plantation sector.

 

The benefits of learning to invest early

 

In a nutshell, the benefit of investing is to get profits that we can eventually use for many purposes in the future. Therefore, learning it from an early age is something that the young generation needs to do. Especially in an uncertain pandemic situation that demands the ability to manage finances better.

At least, there are three benefits of learning to invest earlier that we need to know. Here is the explanation:

 

1. Having Emergency Fund

 

The younger generation, in general, is financially vulnerable. It is inseparable from the YOLO (You Only Live Once) lifestyle concept, which is sometimes still misinterpreted. Some people still have the habit of spending money to get personal satisfaction instead of strengthening financial resilience.

For example, using money to buy expensive things that are not necessarily needed, travel whenever there is an opportunity, or seek entertainment without considering the savings. Interestingly, the COVID-19 pandemic has begun to awaken people from this extravagant lifestyle and return the YOLO concept to its rightful place.

Learning from the pandemic disaster, people, especially the younger generation, are now starting to learn to manage finances to prepare for stronger financial resilience. One of the ways is to invest some of the money into an emergency fund.

The emergency fund allocation can be used for urgent needs in the future, such as paying for health costs that are not covered by insurance and BPJS. It can also be a savior if a family member experiences sudden termination of employment (PHK). In general, the investment instruments chosen to become emergency funds are those with minimal risk. Some of them are deposits, mutual funds, and precious metals.

 

2. Having Financial Freedom

 

Financial independence or financial freedom was popularized by an American financial expert, Robert T Kiyosaki. According to Kiyosaki, financial freedom is not about how much money a person has. Instead, it is about changing mindsets.

Kiyosaki shared that his father said, “There are two kinds of money problems. Not enough money, and too much money. What kind of money problem do you want?”

In short, financial freedom is a phase when we feel adequate with our financial capabilities. This condition allows us to be free being ourselves and do the things we love without worrying about our financial situation.

Under normal circumstances, an example of someone who is already in the financial freedom phase can be seen from his lifestyle. For example, he can prepare a vacation fund without the hassle of paying bills after returning home, or he has funds to spend time or fulfill hobbies without having to bother with shopping bills, or he can eat anything without having to think about the price of food.

Meanwhile, in an uncertain situation like now, someone who has financial freedom will certainly not panicked or worried excessively. It is inseparable from a mature mindset, an adequate financial condition that was prepared long ago.

In short, someone who is financially independent already has an emergency fund, health fund, education fund, or even a pension fund. These funds can be used to deal with uncertain future situations such as the Covid-19 pandemic.

Many think that financial freedom is only achievable by becoming rich, having a large salary or having monthly income. In fact, with proper wage or income management, we can still achieve financial independence.

The key to achieving it lies in our willingness to change the mindset towards a lifestyle, followed by good financial planning. It can help us control our expenses so that they don’t exceed our income. In addition, it is also necessary to have goals, be consistent in setting aside funds and start investing early.

In short, financial freedom is achievable if the mindset of our lifestyle has been changed, has a financial strategy, and develops good habits in managing finances. On the other hand, avoiding consumptive debt to pay for unnecessary purchase can help.

If the investor can manage his investment assets well, he can achieve financial independence. He can support his daily needs from the profits of his investment without any worries.

One thing to remember, the main purpose of investing is to minimize the reduction in the value of money from inflation. The second goal is to gain profit to achieve the specified life goals.

The condition of financial freedom does not always have to be rich and have abundant wealth, instead we can be ourselves and do whatever we want without worrying about our financial condition.

Even though it sounds like a dream, but it can be achieved. The condition is that you must continue to learn to be able to manage your finances well and be firm and self-disciplined in allocating funds for investment.

 

3. Preparing for a Better Future

 

Learning to invest on your own is not without its challenges. A common mistake that is often found in novice investors is inconsistency in allocating funds for investment.

Many think that investing is a shortcut to become rich. Yet, the reality is that an investor must determine his investment goals, be it for the short term or long term, before gaining profits.

There are various reasons for the inconsistency of novice investors. First, they have no goals and have a FOMO (fear of missing out) mentality, so they tend to follow trends. Second, a misguided mindset that think of investing as a shortcut to instant wealth, so they have high hopes that all investments are profitable. Third, they do not recognize their risk profile.

An example of the case is when the capital market began to show indicators to rise after being hit by the pandemic issue last year. At that time, many novice investors invested for profit.

However, the trend later reversed, and many novice investors lost and became angry. Their mentality is not ready to face this reality.

This phase is avoidable if we have learned to invest early because we already have experience and knowledge of the risks of every investment taken. In addition to being mentally trained, discipline in allocating funds is also more developed.

In the end, when the mental and self-discipline of an investor has been awakened, the ultimate goal of investment can also be achieved. Whether it is to buy a house, get married, have a new vehicle, pay for higher education, or fund early retirement.

The future is full of uncertainty. There must be independent variables that cause an event to occur beyond our control and plans. An example of this is the current pandemic caused by the COVID-19 virus.

In addition, a person’s physique will change and will no longer be the same when he enters old age. The ability and productivity to work will be much different from the conditions in the productive years. It will automatically have an impact on a reduced income.

At times like this, investment shows its role as the answer in preparing for a more secure future.  If we have learned to invest early, it will help to reduce the burden of collecting money for retirement later.

Investments early on can also help prevent the sandwich generation in the family.  They are the generation that is responsible for setting aside income for their parents and at the same time having to meet various personal needs. On the other hand, we are also better prepared if we have to retire early.

 

Investment options in the digital age

 

In the past, access to buying investment instruments was still hard with complicated terms and conditions and sometimes exorbitant fees. It slows down people’s literacy and interest in useful financial products.

However, this situation has changed along with the rapid development of technology and disrupt the way we obtain investment instruments. The public, especially the younger generation, can now access many investment instruments from the palm of their hands and buy them at affordable prices.

However, knowing and understanding the instruments or types of investment available in Indonesia also needs to be considered. Thus, we can determine the investment that suits our needs.

Thanks to current technological advances, the public can obtain several investment instruments conveniently to invest early. Some of them are gold, mutual funds, stocks, deposits, bonds, state securities, and investment through loans.

All of those instruments are easily accessible after going through the online or offline registration process, and some of them can be purchased at very affordable prices.

One way that investors can take to obtain mutual fund instruments is through Danareksa Investment Management (DIM). DIM is licensed as an Investment Manager and trades mutual fund investment instruments through the Danareksa Online service, which is accessible through its official website at http://dmia.danareksaonline.com/.

There are many payment methods for buying investment instruments that can be used today, such as mobile banking, internet banking, and digital wallets that are accessible via smartphones. In addition, it is also possible to make payment through minimarkets, partners of related financial institutions, or via ATMs such as ATM LINK that spread throughout Indonesia.

ATM LINK is a service that facilitates ATM cardholder customers from Himbara bank to make transactions such as balance checking, cash withdrawals, transfers, and bill payments. One of them is a bill for the purchase of investment products in all ATM channels that are members of the LINK network.

 

Early Investment Starts with Strategy

 

Learning to invest early is important, but not without significant challenges. In its journey, every investor must experience failures and losses from their investment portfolios.

What makes the difference is the attitude when they meet failure. Will they embrace it, organize their mentality, and discipline themselves to increase their knowledge or will they close their eyes and walk away. Especially with today’s technological advances, almost all investment instruments are easily accessible and purchasable at affordable prices. So, there is no reason for us not to start learning to invest early.

One thing that needs to be considered is to make a strategy and prepare for the best possible investment plans and goals before starting to invest. Every investment has its risks. There are low-risk ones such as deposits and mutual funds, but there are also high-risk ones such as stocks and business investments through peer-to-peer lending services.

So, before deciding to buy an investment product, don’t forget to study all the risks that exist to determine the investment product that suits your needs. Learning from experienced friends or family, reading books, taking online classes from trusted institutions, or simply watching videos about investment tips in your spare time can be the first step towards the right direction.