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Plan Your Finances by Investing in Mutual Funds

Nov 19, 2020
4 Menit

Unpredictable, most notably one that involves your finances, must be anticipated by preparing for yourself as soon as possible. Take an example of this pandemic situation starting from the beginning of 2020 which heavily affects the global economic state. In order for you to face the many possible financial challenges that may happen in the future, you can start by managing your finances as early as you can. By managing our finances now, we get to be more thorough in allocating funds, so those funds won’t only be used for short-term needs, but also for long-term ones. Not just with savings, another way that you can use to plan your finances is an investment, such as mutual funds investment. Let’s dive deeper into the world of mutual funds investment.

Investments Based on Time Horizon
Based on its time horizon, investments are classified into two categories, long-term investments and short-term investments. Long-term investments are managed in a longer period of time, ranging from years to decades. Although these investments generate higher returns, the investors will have to wait much longer to take home the profit, when compared to short-term investments. Unlike long-term investments, short-term investments are managed in a shorter period of time, from one to three years maximum. With short-term investments, we can get the profit much faster, but the returns are smaller. In this article, we will explain further about one specific example of short-term investments, the mutual funds investment.

What is a Mutual Fund?
Before we talk further about mutual funds, first we must know what a mutual fund is. A mutual fund is a type of investment done by accumulating your funds and managing them to several portfolio instruments or securities, such as stocks, obligations, and money markets or securities. In mutual funds investment, your invested funds will be managed by an investment manager or an experienced investment expert. 

As the funds are managed by experienced investment managers, mutual funds investment becomes the perfect choice for beginners who don’t have enough knowledge and experience in investing. Furthermore, you are also not required to spend a lot of time to manage your invested funds as the investment manager is ready to do just that. Starting a mutual fund investment can also be done at an affordable cost. With a lower cost and minimum investment funds needed to be prepared, mutual funds investment is one solution worthy of your time and consideration, especially beneficial for your future financial planning. 

Tips on Investing in Mutual Funds
If you are interested in starting a mutual fund investment, here are several tips that can help you:

  • Define Your Investment Goal
    Make sure that you have found your investment goal as you start investing in mutual funds. It’s important to align your investment goal with your financial goals, instead of a mere thoughtless goal. This financial goal can be in the form of funding for several future needs like education funds, retirement funds, and many more.
  • Adjust the Investment Time Horizon
    A longer investment period means a higher risk that you need to be prepared for. Therefore, make sure that the time horizon of your chosen investment suits your investment goal.
  • Diversify Your Investments
    If you invest all your funds in one instrument, there will be higher risks that you have to overcome. To avoid this, it’s recommended to invest your funds in several different instruments to lower the risks of profit loss simultaneously.
  • Start Investments Periodically
    When compared with making several investments simultaneously, it’s better to routinely make different investments for a long period of time. This way, you can have an optimal potential for capital growth than if you’re making numerous investments all at once.
  • Perform Financial Check-Up
    Before deciding to start mutual funds investment, it’s important to have a monthly review of your financial state. Therefore, you can decide the right time to start investing as well as set the appropriate number of funds that you can allocate to your investments.
  • Routinely Monitor Your Investment Portfolio
    After starting your mutual funds investment, you can monitor your investment asset allocation periodically. You can easily access available mutual fund products with a conventional method via national print media, or with a digital approach via electronic media. You also get to periodically rearrange your investment asset allocation or re-balancing it in accordance to the market situation, if needed.

Understand Your Risk Profile Before Starting Mutual Funds Investment
Apart from those six tips, you also need to know your profile risk before investing in mutual funds. Understanding your risk profile is one of the most important early stages to determine your preferred investment target. Risk profile, as well as investment goal, is separated to risk-averse, conservative, moderate aggressive, aggressive, and highly aggressive.

Risk-averse is a risk profile for customers whose investment goal is to gain protection and security of initial investment and generate profit from deposit interest that may not be bigger than the inflation rate. Customers with this risk profile are not willing to invest in products that possess risks to their investment principal.

Conservative is a risk profile for customers whose investment goal is to gain income and security of initial investment, so it won’t be reduced due to inflation. These customers are prepared to face medium-term investment risks.

Moderate is a risk profile for customers whose investment goal is to gain slightly higher income by calculating sufficient security level. These customers are ready to face moderate investment risks with medium to long-term investments.

Moderate aggressive is a profile risk for customers whose financial goal is to gain long-term income and growth in principal investment. These customers are ready to face high investment risks and fluctuate on long-term investments. The customers’ investment value may experience high fluctuation and be reduced greatly from its initial investment value. 

Aggressive is a profile risk for customers whose financial goal is to gain significant growth in principal investment. They are willing to accept very high investment risks and fluctuate on long-term investments. The customers’ investment value may experience high fluctuation and be reduced greatly from its initial investment value.

Highly aggressive is a profile risk for customers whose financial goal is to gain an outstanding growth in principal investment. They are willing to accept extreme investment risks and fluctuate on long-term investments. The customers’ investment value may greatly decrease and there are possibilities for complete loss of total initial investment value. 

With the numerous facilities and affordable minimum investment funds, mutual funds investment is the perfect choice for you to start investing and planning your finances. Therefore, you can be more prepared in facing any financial challenges that may come your way. If you are interested in starting a mutual fund investment, make sure that you’ve chosen a trustworthy mutual funds management company to oversee your investment. Just like PermataBank that has been trusted to manage various mutual fund investments. PermataBank also offers numerous mutual fund products, from equity funds, fixed income mutual funds, index funds, money market funds, to hybrid mutual funds. You can choose from these mutual funds products based on your risk profile, whether it’s risk-averse, conservative, moderate, moderate aggressive, or aggressive. Moreover, PermataBank provides comfort in monitoring your mutual funds digitally via PermataMobile X and PermataNet. Interested to start your mutual funds investment with PermataBank? You can learn more about the various mutual funds investment offers from PermataBank by clicking here.

Equity fund denominated in Indonesian Rupiah

BNP Paribas Ekuitas

Rupiah-denominated mutual fund

Ashmore Dana Ekuitas Nusantara

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