Investing Insight 2019


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1. Achieving Financial Independence Through Investing

Who does not want to achieve financial independence? I think there is not one single individual who would not want to be financially independent. Achieving financial independence has become every individuals’ dreams. Though not everyone has the same interpretation to the definition and meaning of what financial independence is, I think we can all agree that being financially independent means that we do not have to worry about fulfilling our daily lives’ needs, or at least our primary needs; food, clothing, and shelter. Others also have opinions that to be able to consider one as financially independent, they have to also be able to prepare for their future.

Thus being said, how do we achieve financial independence? What should we do to become a financially independent individual? Well, through investing, you might get to achieve your dream of being financially independent sooner than you think! Of course you might ask, “Why does it have to be through investing?” Well, let’s say that you have $20.000 with you right now and you have 3 options: First, keep your money under the mattress. Second, save your money in a bank. Lastly, invest your money. In 30 years from now, if you chose the first option, your $20.000 will remain the same, and if you chose to save your money in a bank and get 2% interest from it, your $20.000 would be $36.337. However, if you chose the last option, which is to invest your money and get an annual return of 5.48%, your $20.000 would become $99.113 by the end of the 30th year. So, why not investing?

Of course, when it comes to investing, majority of people are worried to start due to several myths circulating around investing that make a lot of people reluctant to do so, such as: “You need a lot of money to invest!” or that “You are too young to start investing.”, which is totally not right! You can start investing by only investing 5% of your money and you certainly do not have to wait until you are 30 to start investing.

To start investing simply, here are some tips that might be useful for you: First, decide what level of risk you are willing to take. Remember that with high risk, comes a higher return. Second, study the market. Observe the market and find the industries and companies you want to invest in, search for the company with a good track record and a stable company that most likely would still be around for the next decades. Third and last tips is to find the right time to invest your money. Choose the right price to buy the stocks by looking at the price charts and buy it when the price is relatively low on the usual fluctuations.

2.    Investing For the ‘Newbee Milenials’

A lot of millennials who aged around twenty years old mostly seek additional income from their part-time jobs and looking for investment opportunity. Those who first entered capital markets usually did not understand what they were really facing. Random stock picking will only donate our pennies to the market and would not give us anything. Here are some tips to start investing:


  1. Know your company

Before deciding which companies to be invested, we really need to do a research for several companies. Comparing current performances with past performance of the company can give us insight about what is really happening. Besides historical performance, cross-sectional analysis can be beneficial too to compare each companies with similar business and size of the firm.

  1. Perform a diversification

Like people said, ‘do not put your eggs in one basket’. This statement is highly correlated with investing world. Mathematical concepts has proven that we can minimized our total risk of a portfolio if we invested in companies that does not correlate perfectly one another.

  1. Do not just follow others

Lot of people invests in companies that others do invest too. Doing this will not lead us to our results that we desired. We would lag behind the market as we perform actions after the market has shifted.

Here are just some tips to begin your journey in capital markets. Learning will not stop any time in our life, but these definitely will help you to start!

3.  The Art of Investing

“The only certain thing in this world is uncertainty”

We are currently living in the world of Fear, Uncertainty, and Doubt. What most people wanted is financial freedoms, including me. It all started during my internship program in PwC Consulting Indonesia, where I learned a lot about financial freedom. One of my mentor, who is Master in business and administration taught me plenty things how can I achieve financial freedom in year 40. He taught plenty of things about investment and it leaves me with lot of curiousity about it. This curiousity led me to a decision of taking one of the most impactful subject which is Capital Market.

Financial freedom itself means that you are able to make every decision in your life without being overly stressed about the financial impact because you are totally prepared for it. You take control your finances instead of being controlled by them. It gives us the ability and privilege to enjoy living our life without having to work. Most of people right now have to pay something (their time and/or energy) before they can enjoy making expenses to fulfill their needs or desires. In our youth paying for our happiness may not be a problem as we still have a lot of energy to spare, but as we grow older our willingness to‘pay will decrease and may even disappear totally when we have reached a certain stage.

So how can we achieve financial freedom?

Once Albert Einstein said, Compound interest is the eigth wonder of the world. He who understands it, earns it, and he who doesn’t, pays it.” There’s only 1 way to achieve financial freedom which is called with investment. So the next question will be “how to make a good investment?”

Well, there’s no absolute way to make a great investment that will gives us the highest return without any risk included, risk is unavoidable. We need to come up with our own way to invest our money, but always remember “don’t put all your eggs in one basket,” diversification is the only ‘shortcut’ to minimize risk. Everyone has their own method/way to become a good investor. Besides, there’s alwas tips/guidelines that can be used to start investing, here is my tips to make you easire to start a good investor.

  • Keep yourself updated, there’s several asset which is very volatile, so you reallt need to be aware of every changes regarding that asset. For example if you want to invest in stock, keep yourself updated about the things that may affect the market.
  • Make yourself understand about the risk of every investment. In order to become a good investor, you need to be sure of important aspects that might affect the growth of an asset. Make sure that you’re understand about company (reputation, growth, prediciton,etc) which will you put your money into it.
  • Investment diversification is always needed. Never put your money into one asset, by doing diversification, you can minimize risk. For example, by doing stock diversification in different sectors (property, FMCG, infrastructure,etc) the stocks that you have are uncorrelated, so if one of the stocks prices are decreasing, the value of your portfolio would not decreasing much because there’s no correlation between it.

I think, that’s several tips from me and I hope it might be useful for everyone!

Don’t forget to INVEST!


4.  Using the P/E ratio in valuations. Are you sure it’s accurate enough?

In valuing a company we often use P/E ratios to assess, whether the company is “cheap” or “expensive” when compared to other companies in the same sector. However, according to one of the best Fund managers in the world, Peter Lynch in the book One Up on Wall Street, he explained in conducting the Valuations that he uses the PEG ratio because this ratio includes the growth of Earnings every year and the consistent growth of EPS is a good indication in a business.

Let’s start this discussion with a definition, P/E ratio is Price divided by Earnings. From this we can find out if a company stock has a PE of 15, then it takes 15 times annual income so that investors return on investment. With this definition and example, we can conclude that the smaller the PE ratio, the more attractive the stock for investors to invest. Then let’s discuss the PEG ratio, PEG is PE ratio divided by EPS growth.

To be more imagined, let’s do a simulation:

Company A

  • Price per share = 45 IDR
  • EPS this year = 2 IDR
  • EPS last year = 1,74 IDR

Company B

  • price per share = 85 IDR
  • EPS this year = 2,6 IDR
  • EPS last year = 1,8 IDR

Then using data from the two companies can be calculated as follows:

Company A

  • P/E ratio = 45 IDR/ 2 IDR = 22,5
  • EPS growth = (2 IDR/ 1,74 IDR) – 1 = 14%
  • PEG ratio = 22,5 / 14 = 1,6

Company B

  • P/E ratio = 85 IDR / 2,6 IDR = 32,6
  • EPS growth = (2,6 IDR/ 1,8 IDR) – 1 = 44%
  • PEG ratio =32,6/44 = 0,74

At first, it will look more attractive company A, because it has a smaller P/E ratio than company B. However, Company B is trading at a discount to its growth rate and investors purchasing it are paying less per unit of earnings growth. From this, it appears that PEG has considered more comparative variables namely P/E and EPS growth. Which EPS growth is unknown only by looking at the P/E variable

So that the accuracy of PEG calculations can be increased, the average EPS growth can be done over the past few years, such as 5 to 10 years back, so that later it can be seen whether the EPS growth is consistent or only in certain years. Of course, the PEG ratio also has a disadvantage in the form of no guarantee that earnings will increase in the future so that if future earnings decline, EPS growth will be negative.

So according to my observation, it would be wise to use the P/E ratio and PEG ratio simultaneously. To find out whether it is cheap to the latest Earnings and cheap to the company’s Growth Earnings.

5. Ojek Driver Has 40 Billion Rupiah In The Bank, Learn This Simple Trick To Get Rich!!! – The Power of Compounding Investment Over Time

YES, YOU READ THAT RIGHT!. Even though that blue-collar jobs are considered as some of the lower-paying jobs, these people can achieve the status of a billionaire. It is not only about hitting that magical number of Rp., but also many times beyond that. I am not going to talk about get-rich-quick schemes that will bring you a fortune overnight but rather I will illustrate the power of compounding investment over time. We will follow a story of Nadiem and Makarim, two 20-year-old blue-collar workers to illustrate this point.

It was the end of the 2015 Ramadhan. Nadiem, Makarim, and thousands of other people from numerous villages across Java came down flocking to the capital city in search of fortune. Young, unskilled, and unprepared, they were both struggling to make a living but they are hopeful and believe that there is more to come. After persevering through the hardships, they finally got a job. Nadiem managed to become an online Ojek driver by using a motorcycle he obtained from a loan program specifically for drivers. On the other hand, Makarim managed to land a job as a cleaning service in an office. Makarim was paid a minimum wage of Rp. 3.800.000 per month while Nadiem gets a similar amount from his Ojek job. Both of them lived thriftily and managed to set aside Rp. 500.000 each month. One of the villagers in Nadiem’s village came back to the village during Ramadhan and he is an investment manager at Berkshire Hathaway. He told Nadiem about Warren Buffet, value investing, money management, and other financial knowledge. Inspired by this, he decided to invest his money in various financial instruments such as mutual funds, P2P lending, and some stocks. He managed to get a nice return of 10% every year. Makarim, who does not have financial knowledge as Nadiem decided to put his money in a deposit account with a 6% return per year.

They are now 25 and they have decided to marry the love of their life. With the combined income from their partner, they can now save Rp. 1.000.000 per month. Makarim still saves his money in a deposit account while Nadiem, through constant learning has managed to increase his return to 15% per year. Five years later both of them decided to have a child, so their wives quit their job to open up a small warteg. This warteg seems to be a successful venture and it can cover their expenses and increase the amount that they can save to Rp. 2.000.000. Nadiem is getting better at managing his portfolio and with the assistance from his wife can now generate a return of 20% per year. Both Nadiem and Makarim continue to live like this until their retirement at 60.

It has been 40 years since they first step foot into the capital city. Their hair turned gray and their skin wrinkled. Their children have grown since and built their own families. They stepped out of their offices for the last time. It is time to retire. Makarim has accumulated

Rp. 2.500.000.000. With this money in the bank and the monthly allowance that his children sent him, he and his wife can enjoy a comfortable retirement.

Nadiem and his wife decide to travel the world as part of their retirement plan. Nadiem figured out that he would need a platinum credit card for ease of payment abroad. He goes to the bank to apply for one. The customer service smirks condescendingly after finding out his background and thinks “how does this old-man have the audacity to get something that he definitely can’t afford”. The customer service is curious and she did some digging. She is shocked that this old-man actually has Rp. in his bank account. Also, he has another Rp. in various other assets. How could this be?. It’s not magic, it’s just investment and mathematics. The detailed calculation can be found below.

Calculation – Nadiem 

Calculation – Makarim

The story above demonstrated the merit of investing over a long period of time. The moral of the story on investing that we can get from this story is:

  • Time is on Your Side – Invest Early

Nadiem is an Ojek Driver, Makarim is a cleaner and Warren Buffet is an investor and owner of one of the largest investment firms in the world. What do they have in common? Time. Each of them has decades to do their investments. This highlights the importance of investing early because time will magnify the effect of compounding the return of your investment over time. Had they realized that they need to start investing when they are 35 years old, they would have gotten a significantly smaller amount compared to the one stated previously. Make investment a habit, start the ball rolling.

  • One Kick Practiced 10.000 Times – Discipline

You might say that the story lacks realism because the characters can put aside a fixed amount of money for investment every month and in the case of Nadiem, manage a superior portfolio for years. I can agree with this. In real life, we might have needs and wants that have to be fulfilled and can sometimes hinder our ability to save. Discipline yourself to save. When you save, put aside some money that you will not definitely use for whatever reason.

In the case of Nadiem, discipline yourself to invest. People sometimes lack the persistence to invest.   Be consistent in evaluating investment opportunities that suit your return and risk requirements.

  • Enjoy the Ride and Enjoy the View – Don’t Sweat the Small Stuff

You might think that you might lose your money when you invest your money in instruments such as mutual funds and stocks. Congratulations, you are absolutely right!. However, a higher risk is usually associated with higher return and it is our ability to manage the risk that makes the use of these instruments worthwhile. When you pick the wrong stocks or mutual fund and it breaks you mentally, remember that investing is a life-long learning process and it is fine to make a couple of mistakes in your early years do not sweat over it too much. Move on and learn from what you might have done wrong, find a mentor if possible. The loss of your investment is a fee that you paid in order to learn to invest. Even if it takes you 10 years to be a good investor that produces a superior return, remember that you still have 30 years to do your investment. Keep learning and improving and you will see the result. Enjoy the ride and enjoy the view.

We have learned some lessons on investing from our friend Nadiem and Makarim. I believe that you, the reader are probably in a much better situation compared to those two. You may be intelligently gifted, come from a wealthy family, well educated, has a good career or have all of them at once. If they can do it, then what is stopping you?. Even if you don’t have the traits mentioned above, we have seen that it doesn’t take extraordinary people to get extraordinary results and that is exactly the point that I am trying to make. I want people to see that the capital market is not only for CFA certified investment managers whose job is to manage portfolios consisting of hundreds of billions of Rupiahs nor it is for the data scientists that developed the latest and greatest machine learning model that can accurately predict the market. It is available for all people from different walks of life and everyone has the chance to prosper from it. Considering that the number of stock investors in Indonesia is less than 1%, there is much work to be done in order to spread the word and make it common.

I would like to finish this article with a quote from a wise man. My lecturer once said jokingly that “Menabung pangkal miskin, makanya investasi!” or something along those lines. This seems to be a casual joke at a glance but it has an economic truth to it. Inflation will erode the value of your money, regardless of what you do. However, Investment can minimize the impact of this erosion and can even make it negligible. You know what to do now.

6. If not now, then when? 

The ancients said, “If you want to be rich you must be diligent in saving”, but modern people say “if you want to be rich you must be diligent in investing”. For people who are still unfamiliar with the investment sentence would definitely prefer to save rather than invest. Whereas, logically, if our money is only deposited in a bank account, the value of the money will be eroded by an increase in inflation.


Today, humans are competing to create a tool or system that can facilitate human work. What is not spared from these innovations is the advancement in financial technology. There is already lots of evidence from the progress of fintech, for example online banking, peer to peer lending and online mutual funds. From these examples, which are included in one form of investment?

Mutual funds are made to make it easier for people who want to participate in the Indonesian capital market but don’t have the ability and knowledge as high as traders in general. Investors only need to entrust their money to the investment manager and then the investor will get a return from it. Then where to start?


With so many online marketplaces selling mutual funds, it is easier for potential investors to transact mutual fund products. Online mutual funds have changed the majority of mutual fund transaction processes, from registering to buying and selling transactions. Because all processes can be done online and paperless. Not only does it simplify the process, but several online mutual fund platforms also provide a financial advisor feature that is very useful for potential investors who are new to investing.


Online mutual funds also ease the minimum deposit, which in the past if people want to invest through mutual funds, they must provide at least one million rupiah for a minimum deposit. But now, investors only need to save Rp 10,000 as a minimum deposit and most importantly, all of these platforms have been overseen by OJK. With the various conveniences and security offered by online mutual funds, I don’t think there is a reason for people not to invest in mutual funds. So, if not now, then when?

7.      Recession in 2020

Weaker growth in developed and advanced countries leads to recession. Many economists predict, In 2020, the UN predicts there will be a recession. Many countries have already in a recession, for example, Hongkong, Germany, etc.

Economy global is being haunted with a great recession in 2020, and so is Indonesia. Indonesia’s economy kept slow down until 3Q19. An economist, Bhima Yudhistira said that this recession might be worse and more complex than 1998, more this recession may end in 2023 or 2024. He said many factors caused this recession, they are trade wars, Brexit, unhealthy Asian geopolitics. Recession likely happen in 2020. Here is the indicator that mostly used by economists:

  • Inverted Bond Yield Curve

Source: FactSet Research Systems, August 14, 2019

In the USA, if the bond curve is in the inverted yield curve, it means that you have to be prepared. Usually, they compare 2-year bonds with a 10-year bond. By 8 November 2019, there is a slight difference between these bonds. Halima Yefany Syahputri 19017011 Capital Market – Investing InsightSources:

  • Big Economic Countries Growth.


As we know, there is a trade war between China and the US. This impacts both parties involved and many other countries. The US’ economic growth decrease to 1.9% and so does China. China’s economic growth falls to 6%. It’s the weakest growth since 1992.

  • Indonesia Economic Growth


  • USA and China are the 2 biggest economies in the world. If both of them weakened, the global economy will be weakened. Indonesia is affected by this weakening, marked by declining economic growth in Indonesia. This shown by :Amount of export and import are declining in 2019 and deficit.
  • Significant drops in the new project contract in construction emit There are significant drops of new project which got by Construction company (WIKA, WSKT, PTPP, ADHI). If there are no changes in the new project contract by the end of 2019, there will be a strong indicator of recession in 2020. Economic growth depends on infrastructure development. If infrastructure development slows down, it will slow down the economic growth
  • Price fall of export commodity One indicator of a recession is price falling in commodities. For example, price fall in coal. From July 2018 until now, coal prices keep declining significantly to USD 50 per metric ton. This is because China, which is a coal importer, is closing its import route tightly because China is experiencing an economic downturn. Therefore, the demand for coal continues to decline while supply remains. In accordance with the law of supply and demand, when demand falls and supply stays or increases, prices will fall
  • Rising price of gold Demand for gold is higher. Gold is one of the safest ways to secure assets when facing hard times. This increase in demand shows that the public is concerned about the increasingly high crisis.

Based on these indicators, the recession in 2020 will likely happen.

From my point of view, this recession can be said as a period of opportunity to invest even though we will not know when the recession began and when the recession will end. In a recession, we can get assets at low prices. However, we must also look at the fundamentals of these assets. Assets with good fundamentals will bring us more profit in the future. Whereas assets with fundamentals are not good or bad, most likely to harm us in the future, especially in a recession.

To prepare for this recession, we need to prepare cash. This cash can be used to invest. Do not let us lose the opportunity to invest at a good price because we do not have cash. If at this time, we are having assets with unfavorable or bad fundamentals, it would be nice if we let go of these assets and get cash for investment in a recession.

8. The Road to Financial Freedom (2)

This article was inspired by The Road to Financial Freedom ( by Agustinus Calvin from Team P-All Right Investment. I have to admit the article was well written for college student level with basic knowledge. Though, I noticed that there are elements that can be included to improve this article further. One of many elements that I think should be included in the article and used by us investors is mental needed to ‘invest’.

Defined by Oxford, mindset is “the characteristic attitude of mind or way of thinking of a person or group”. This characteristic attitude of mind or way of thinking is important in making decision to make an investment effectively and efficiently under various variables and data available.

To the extent of my knowledge and my experience, these are the mindset needed when investing:

  • Growth Mindset

Keep on learning,  keep on running, keep on investing. We might face ‘loss’ or miss a chance to get optimum benefit. We might fail when making a bid. We might fail as we are lacking in knowledge and skill needed, but it is okay.

You should keep this mindset:

    1. Keep on learning through every possible way.
    2. Whatever you do, will be beneficial to you in a unique way.
  • Business Mindset

Focusing on profit is important, but we have to also consider it business-wise too. Is it beneficial in the long run or just beneficial now?  Which one should be chosen? Is it ethical? These are the questions we should keep in mind because when you consider this mindset you can get the most out of it.

  • Confident Mindset

We should be confident when taking a decision, just like my lecturer said, “Believe in  your calculation, if you don’t, why would you do that in the first place?”

Not doing something at the right moment could lead to loss, not starting investing now could lead to regret and of course we don’t want that. It can be prevented by having some confidence in our calculation, our mind, and yourself.

With these mindset in our pocket, no worries, profit will come to our pocket. Let’s be a good investor with the right mindset!

9.  As an investor you should be different

A company from its inception, of course, its main purpose is to make a profit. 20 years I have lived I have never heard of a company founded to suffer losses.

Unfortunately the facts speak that no company experiences continuous profits. Even companies as big as Google have suffered losses. But the company that suffered losses also does not mean to say that the company is bankrupt if the company can still operate. Looking at this situation, it is clear that the company also has the name ‘disease’. To see and analyze ‘disease’ is certainly not an easy matter. Further analysis of the company’s diagnosis is required.

Investors are not gamblers. As an investor who wants to buy shares of a company, certainly requires more than just speculation and gambling to choose the shares to be purchased. A true investor will do an analysis of the company as choosing a life partner. He will examine the history and travel of the company to be purchased by using various approaches and techniques to analyze whether the company is sick or not.

At present knowledge and techniques on how to analyze companies are various. Both technically and fundamentally. Along with the development of the world of science and technology, we can learn how to analyze companies from various sources such as books, the internet and social media. Unfortunately no one explicitly provides a way to diagnose the company as “healthy” or not. Even Warren Buffet, considered the biggest investor in the world because he managed to become the richest man for several years, never shared clearly how to analyze the health of a company that he bought his shares.

Knowing this fact, you must understand that various approaches, both technical and fundamental are just ways and tools to help you diagnose the health of a company. Tools and plans will certainly be different ways to use it from one person to another because everyone’s head contents are different and everyone’s life experience is also different. In addition, the amount of capital owned and the risk profile of each person also varies. So it is not surprising that the results obtained by each person will always be different from each other.

That is the message that I want to convey in this article. Everyone has a different perspective in analyzing a company. The risk profile and the amount of capital we have are also different from the others so we cannot depend on the analysis done by others. So, in investing, you must build your own confidence and should be able to find yourself the most suitable and comfortable way for yourself.

I am not saying that finding a suitable and convenient way for yourself is easy. There are no shortcuts to become good at analyzing company’s performance. Repetition is a mother of skill. The only way is we have to take time to read and practice repeatedly. That way, we will get better and sharper in analyzing the performance of a company.  Believe yourself that you can.

“Put all excuses aside and remember this: You are capable.” -Zig Ziglar-

10.Make your money work for you

Have you heard news about “Indonesia’s millennial generation is currently faced with the problem of the difficulty of owning a home?”. However, those rumors sounded too bad to be true if millennials can’t manage their money wisely. The statement from Indonesia Minister for Public Works and Human Settlements, “the most underlying problem for this is because high millennial consumption expenditure, meanwhile little increase on national wage and interest rate.”

However, one of the ways for millennials to enjoy long-term prosperity, solely rely on lowering consumption and saving money won’t be enough. The terms “make money work for you” is common personal finance advice, but sometimes it’s not clear on how to make it happen. Especially for some college-students, sometimes setting aside money to be saved can be difficult since millennials tend to maintain their appearance at all cost and have FOMO condition. Thus, consumptive habits might be inevitable.

One of differences between the wealthy and less wealthy is that they earn interest meanwhile the latter pay interest. Money work for you is one of the ways to reach true financial independence. Below are some tips that might help you to break at least bad financial habits.

  • Create budgets.

Not many people realize that assigning each rupiah to a category is important. Because it will help you to begin to reach your financial goals. Budget also the best tool you have next to your income to build wealth because it gives you control over finances and allows to make financial decisions at the beginning of each month.

The first step to change your financial picture is by creating budget. Creating is easy, but many people fail to follow through on sticking to it or stop after a month. By creating this, it can make you spend less than you earn. At the same time, you can decide what priorities the most important to you and begin to make progress on your goals from making the decisions on how will spend the money at the beginning of the month.

  • Invest in income-producing asset

Owning assets that produce income is one of the simplest ways to let your money work on your behalf. Examples of assets include stocks, mutual funds, certificates of deposits, bonds, etc. Although most of those instruments has available widely and started with affordable prices, the participations still low compare to other developing countries.

High risk, high return is really happening in investing activities. If you invest in a diversified portfolio of stocks or low-cost index fund for example, it would be reasonable to expect returns of around 7% to 8% annually since that’s the long-term average for market. Diversifying your investment among a variety of types of income-producing assets can be the best approach. For examples you can decide 70% of the money in stocks, and the rest in bonds. This strategy hedges your bets against short-term losses.

Start with assets you’re comfortable with, then learn about different options to expand your investing horizons — and your potential returns.

  • Invest in YOURSELF

Investing in yourself is another great way to generate solid returns on your money. Some of the ways are:

  • You can go back to school to earn additional degrees or certifications,
  • Take specific classes in subjects that could help you advance your career or grow your net worth — for example, how to invest,
  • Pay attention to your own health, because it is one of investments.

Invest in yourself can be important because not only it can enhance one individual’s qualities, the skills that you learn will be yours for life, so they can keep paying off for many years to come.

11.  Dare to Learn How to Become Rich?

Warren Buffet once said, “If you don’t find a way to make money while you sleep, you will work until you die.”

So, did you know how?

There is no sweet storytelling about people getting rich overnight, BUT there is some repeatable, proven way to help you become rich. Yes, it is to ‘make an investment to create an additional source’

Here are insights I figured out in this last three months, joining the capital market class. The first is to start it now, start it small. Sooner you do know how to invest, the sooner you become an efficient-rich person. Do not make excuses to wait any longer. Do not wait until you are wealthy enough to start, yet you have to start now in purpose to wealthy enough later.

The second is to know yourself. You have to check out what is your type towards risk. By knowing what is your risk profile, you know what type of investment that matches you best. Then, you are able to choose what asset to invest. Each instrument is having its own characteristics, as well as their advantages and disadvantages. One simple rule to run this thing: high risk – high return, low risk – low return. Thus, check BOTH of them. Do not only check about its return. If there is an instrument that offers you the highest return, then you should check the risk. Is it safe enough to invest? Take the one which fits you the most.

Stock is the one that has the highest risk, yet it also offers the highest potential return. Bond and other fixed-income securities may have low risk, but it also only offers a low return. The same also goes for the mutual fund. The money market mutual fund which all composed of fixed-income securities (low risk) will certainly give you 1-2% gain while equity mutual fund which all composed investment in stock (high risk) will offer you 15-20% gain. Don’t worry if you are going to be in the middle person, you can choose either balance or fixed-income mutual fund. An extra note is you are required to pick up the investment field you are interested in. We may not that so much talent to mastering all investment fields, so we have to pick, may professional also did the same thing.

The third is diversifying. Same as the old English proverb which said: “Do not put all your eggs in one basket.” If you lose the basket, it means you lost all your eggs. Do not put all your money in one single asset, go search for the other asset. So if there is an asset which goes down, you still handle things which go up.

The fourth is to keep the market updates. Do not miss any information regarding what the market looks like now. Capture them carefully, take advantage of it.

The fifth is do not stop even when you are not doing right. Just learn from the mistakes. Let it go, you can be better next time! People may talk about the best other alternative investment anytime, yet do not easily believe them instead. They might not be better than you.

So, back to point number one. Are you ready to start?

12. Robo-Advisor for Beginner Investor

Humans are inventing more and more things in order to create ease. Robo-Advisor is one of the examples, a new kind of online software that can help people to manage their own investments. This technology will help its users to automatically plan their own wealth management, taking advantage of an algorithm with less or no at all human touch. If you are a beginner who is a typical do-it-yourself investor and do not have enough assets to hire a financial advisor yet, Robo-Advisor is perfect for you. Robo-Advisor will automatically select investments and build a diversified portfolio for you and automatically make changes to the investments to align your portfolio back to a target allocation. Mutual funds or exchange-traded funds are used by mostly Robo-Advisor to build the portfolio. Robo-Advisor follows an index fund or passive investment approach based on modern portfolio theory approach. There are several benefits of using Robo-Advisor :

  • Lower Cost

According to, the biggest reason investors get poor outcomes is because of their behavior. Investors tend to make emotional decisions when the market is high or low, yet this kind of mistake will not be made by online software. Furthermore, Robo-Advisors offer you a lower cost than a conventional financial advisor. Some Robo-Advisors set the annual fixed cost 0,2% until 0,5% from users’ account balance., an Indonesian Robo-Advisor, even offers its users no cost at all. Whereas, conventional financial advisors usually charge 1% to 2% and still have the potential to use a commission-based account.

  • Efficiency

Besides cost, Robo-Advisors also offer ease. It can be used anywhere and anytime within just a click and automates the whole process. You do not have to worry if you should make some changes regarding your current portfolio because Roboadvisor will do it for you. This differs from conventional financial advisors, which require investors to call or do a face to face meeting just to tell your current portfolio condition, give recommendations and write documents.

However, there are also some drawbacks to the use of Robo-Advisors. Automated algorithms have weaknesses. Some Robo-Advisors make the mistake in assuming that a few previous experiences can predict future results. If it is seen from the perspective, a financial advisor may have a better understanding and arguments rather than only considering the previous experience. Also, Robo-Advisors’ will ask you to fill up a questionnaire at the beginning and use this as the base of the decision making process. Robo-Advisor do not consider other underlying reasons

 13.  No Need to Fear, Start with Small Amount of Capital, Starting from Now


There are two main issues that make people reluctant to invest in the capital market:

1) Many people get loss on the stock market.

2) Investing in the stock market requires large capital.

Many people are losing money on the stock market?

It is true that investing in the stock market has a great risk. A company’s stock price can change quickly. It might even be able to go up and down by 10% or more in one day. But do company conditions change that quickly? Often stock price movements are irrational. The stock price can go down even though the company is making a constant profit, and it can go up even though the company is losing money. However, for the long term, the share price will follow the performance or fundamentals of the company.

For the short term, stocks are only seen as instruments for trading. In trading, the most important thing is to only buy at low prices and sell at high prices. Usually traders use technical analysis that uses indicators such as Moving Average (MA), Relative Strength Index (RSI), or patterns on candle charts such as Bull Flag and Triangle Pattern. Traders, through the results of their analysis, need to make a trading plan which includes what price is in, take profit at what price, and cut loss at what price. If it is not disciplined to set these limits, traders can experience unpredictable losses.

We can buy stocks for long-term investment. Buying shares is like buying a portion of ownership of a company. Just like opening your own business, a company’s performance can decline and cause people to be less interested and sell their ownership so the price drops. However, if the company’s performance is getting better and better, then the share price will go up. When the company generates large profits and dividends, we as shareholders will also get a share of the profits.

The share price may go down even if the company develops. We can see that as an opportunity to get company ownership at a cheaper price. Buying shares is an alternative to building your own business. Instead of building a business from scratch, we can invest in a company that is already running, which needs funds to generate more profits or expansion. Strong psychologically and emotionally which is not easily swayed by the ups and downs of stock prices becomes a very important factor for stock investors.

However, don’t forget to diversify too. Buy shares of several companies that we feel are good for reducing risk. Don’t use all investment money just to buy one company’s stock. Because we could misjudge the company and the company that we feel is good turned out to be bankrupt in the future.

Investing in the stock market requires large capital?

For all shares in Indonesia, a minimum purchase is 1 lot (100 shares). The Agung Podomoro (APLN) company shares are now at Rp195 per share. So the minimum investment is 1 lot, which is 100 shares x Rp195 = Rp19,500. But there are also companies that have very high share prices such as Unilever Indonesia (UNVR) which is now at Rp.49,625, so the minimum investment for these shares is around Rp. 5 million. Most shares have a price per share below 2 thousand rupiah or with a minimum investment of 200 thousand rupiah. With a small minimum investment value, there is no reason for us not to invest in shares because it requires large capital.

People who say that investing in the stock market requires large capital, most are traders. They are not people who invest long term. They make trading a major profession, and every month they have to make a profit like a salary. They take advantage of the difference between the buying and selling price (margin), and sometimes only with a profit per transaction of less than 2%. Of course traders don’t want to spend time monitoring the movements of stock prices for 7 hours every day just to make a small profit.

If you have a capital of 100-200 thousand rupiah, immediately try to download the online trading application Indopremier (IPOT) and register. Getting started is much harder than continuing. Starting with small capital can help us learn how to work the stock market without fear of loss. Then we can invest more when there are big opportunities like in 2008 and 2015, when the company’s shares are sold at a sale price. Start learning to invest in the stock market / capital market by directly using large capital it is not recommended.

14. Bear the Market Instead of Beating it

The phrase beating the market means that we get a higher return investment than the Jakarta Composite Index. Even Warren Buffet, CEO and chairman of the investment firm Berkshire Hathaway as also known as Oracle of Omaha, says it’s hard for him to do better than the broader market (per New York – CNN Business). So, should we even try?

The Burdens

To make it clear, I will explain the burdens that every investor and trader should have known whenever they do buy/sell several stocks, there are investment fees. This is the most important thing that your brokerage doesn’t tell you. Most of us only focus on brokerage fees, however, several fees matter too, because it can significantly reduce your capital gain compared to the market.

Investment fees

  • Brokerage fees are a commission collected by securities companies to investors. How much commission is charged? Transaction commission fees for each investor are determined based on the magnitude of the frequency and transaction value of the investor in a given period. For example, an investor is charged a commission fee of 0.18%, then the commission amount for the above transaction is: 0.18% x Rp 1,000,000 = Rp 1,800.
  • JSX Levy (IDX Levy) is a service fee that is charged to investors every time a share purchase transaction is made using the transaction facility on the Indonesia Stock Exchange. How much does the Levy cost? The amount of Levy is determined by the decision of the Board of Directors of the Indonesia Stock Exchange. If the determination of the Levy IDX is 0.03%, then the calculation of the Levy IDX number is 0.03% x Rp 1,000,000 = Rp 3,000.
  • VAT brokerage fee :VAT or Value Added Tax is a tax that is levied under the provisions of Law no.18 of 2000 concerning Value Added Tax and Luxury Goods for services rendered. The tax value on the above stock transaction is 10%. So, the VAT calculation becomes 10% x (Rp1,800 + Rp3,000) = Rp 480
  • KPEI fee: KPEI fee or fees for PT. Kliring Penjaminan Efek Indonesia is a fund that must be paid by an investor for each transaction made to guarantee the fulfillment of the settlement obligations for the transaction made. The amount of the guarantee fund rate is determined based on a decision from the Directors of the Indonesian Clearing and Guarantee Corporation (KPEI), which is 0.01%. In the example of the transaction case above, KPEI fee calculation is 0.01% x 1,000,000 = Rp 100
  • Sales Tax Sales tax or income tax on income from securities sales transactions. The income tax is levied based on Article 4 paragraph 2 of Law no. 10 of 1994 concerning Income Taxes. Income from the sale of the founder stock transaction is subject to an additional income tax of 0.1%. So, the calculation of Sales tax: 0,1% x Rp1.000.000 = Rp 1,000.

0.1% x Rp 1,000,000 = Rp 1,000.

Based on the description above, in general the total amount of additional costs incurred by an investor conducting a transaction such as the case example above is:

Brokerage fees + IDX Levy + VAT + KPEI Fee + Sales Tax

= 1,800 + 3,000 + 480 + 100 + 1,000

= Rp 6,380

Once again, although it’s just a small number, it can reduce your profit from the way it should be. Regardless of the burdens that I explained before, the emotional psychology also becomes the other burdens that an investor or trader could have. As we know to buy low / sell high is the basic formula that everybody knows but does it work? You can answer it by yourself. Anyway, this formula also may create a sense of fear and greed in the stock market, but then I wouldn’t focus on this point.

As Warren Buffet says, “Risk comes from not knowing what you’re doing”. Well, instead of beating the market, it’s better to start to bear it, what I mean by bearing the market is to be more aware of the market. Then, after knowing what you’re doing, so start by knowing what your risk i


15.  Investing at Young Age 

Many people start investing at a very late age, this usually happens because of people feeling more secure to enter investing world at certain condition. The condition is when their financial situation becomes, at least theoretically, more stable. However, they missed a big opportunity behind at their young age, in a prime position to enter the investing world. The next question “when is the right time to start investing?”, there is no specific answer for this question, yet starting as early as possible, even giving you a bigger chance in investing world. Senior investors believe the right time to invest is during or after college, at the age around 20s.

By investing at a young age, you will learn the pattern of financial discipline. Experience is the key, going through various situations personally will not be the same as you learn from textbooks. Most people learn best from experience. To start is just one click away from the tip of your finger. There is so much information on the internet that could help young investors on learning. The benefits that young investors will get, is possibly something you will not get when you are older, which are;

  • TIME – This might be the most important benefits young investors would get. Having time means having longer time of being able to learn by failure. We can’t deny that sometimes, failure is the best teacher and will directly store the memory on long-term memory level.
  • LEARN BY EXPERIENCE – young investors are exposed to a lot of experience that they can attain. They will learn not only from success but also failure.
  • COMPOUNDING RETURNS – The earlier you start, the greater the chance to get this advantage. Compounding returns are best over the long run. The key that we want to solve here, is to overcome time value of money. The time value of money always increases over time. Early investment gives your money an opportunity to grow with the time.
  • RISK TAKING – adult investors are most likely conservative and prefer stability. In other words, they are avoiding high-risk. We all know that risk are in line with return, “high risk, high return”. By starting at a young age, it helps enhance and shape the person’s behavior on considering and taking risk.
  • IMPROVE SPENDING HABIT – Investing at a young age shaped person’s habit of saving, since the resources is still limited. So, to invest at a young age is a big challenge to cut on unnecessary expenses and divert such saved money towards investment.
  • SAVING YOUR FUTURE – Indirectly, by investing at an early age, you give a chance to your future in terms of money that you wouldn’t expect to spend or called urgent money.

It is very important to be aware that starting isn’t easy, yet nothing is impossible. Simply start with making small investments. Investing at a young age will be one of your proud and best decision in your life.

16. What are the best ways to learn about investing if you don’t have a lot of money?

Think you don’t have enough money to learn about investing through seminars or webinars? Don’t worry, the best ways to learn investing is to do investing right away!

Warren Buffett once said: when you own a stock, you own part of a company. So to start investing, learn what makes a good company to invest. Now, here are some tips to start learn investing!

First, choose a sector that you want to analyse. It may be from any industry you are interested in. Interested in bank industry? Choose finance sector. Metals and minerals piqued your interest as they are vital to the future of the global economy? Pick the mining sector. It’s as straightforward as that. After that, analyse the sector you have chosen. Analyse the effect that this sector has on the country’s economy. How the businesses operate all year round. What helps the industry to perform well. How does different political, economic or social things affect the sector.

Next, check out the top listed companies in this sector after the analysing process. If you know any big names in the business, first select them. Now, find out what are the things that these businesses do because they are in charge of that particular sector. Find the top 3 companies in the industry that you can afford with your budget. Afterwards, track those 3 companies. Understand the company’s fundamentals. Understand the basic business of the company in which you want to invest. Understand why you’ve selected a specific sector’s company. Finally, invest in the top company out of those three you shortlisted. Remember! Only invest in businesses you understand.

Repeat the same process for other sectors. Even if you’ve been working in just one sector, try to understand different sectors. Since investment diversification in the stock market is very important.

All in all, making research and jumping into the stock market right away is the best way to make progress in investing. With a little time devoted to learning and research, investors can become well-equipped to handle their own portfolios and make investment decisions, while at the same time being profitable.


17. “Madu dan Racun” of Newly IPO Stocks

Initial Public Offering (IPO) is an event where the shares of a company are first released for sale to the public, so that shares are no longer held privately. Many people identified a company which did IPO by calling them “Go Public”. A company usually going public because they want to get access to long-term funding or get short-term funding without being burdened by interest.

For traders in the stock market, the IPO event is interesting to follow and monitor because often the price of IPO shares surges up from the initial price offered. However, we are familiar with the term of ‘high risk high return’, which is typically a characteristic of IPO shares. IPO Stocks have high risk because of course there are no historical data of stock prices to be analyzed. Thus, often the price of IPO shares is influenced by market sentiment. Therefore, we must remain cautious if we want to buy a newly Initial Public Offering stocks.

Quoting from CNBC Indonesia, CNBC Indonesia’s Research Team noted, from the beginning of 2019 to Friday 18/10/2019, there were 42 companies listed shares on Indonesia Stock Exchange. Out of 42 new issuers this year, 22 listed their best performance from the first listing on the IDX until Friday 18/10/2019, with a capital gain between 1-1706%. Meanwhile, there were 20 listed companies that recorded poor IPO stock performance with corrections ranging from 1% to more than 70%[1]

As we can see from the data above, the gain or loss from Initial Public Offering can be very interesting to watch. It can get extremely gain but there also possibility that the stocks will get extremely loss. There are some tips from professionals in the stock market that we can follow in choosing whether to buy or not to buy an IPO stocks.

  • Head of Investment Research of Infovesta Utama, Wawan Hendrayana, said that from the research he had conducted related to the trend of initial public offering (IPO), if the stock price was immediately positive on the first day, it could be detained for the next month. However, if the share price goes down on the first day, it means the trend will continue to fall.
  • Royal Investium Sekuritas Senior Vice President Janson Nasrial said, before choosing IPO shares, investors must still pay attention to the condition of the industry in which the issuer is involved[2].

So, now we already know the information about Initial Public Offering from the definition of IPO, the risk and return of IPO stocks, and several tips from professional regarding the IPO stocks. Now, it is your choice, do you dare to invest in the IPO stocks?

 18. Collecting money is different with bailing out water


Investment for most people is still considered something exclusive. It is as if only those who are rich or who are involved in the capital market can invest. Though the investment can be made by anyone, starting from one hundred thousand rupiahs.  Investment also can make someone become established or can also be called to achieve financial freedom. The indicator, there are funds for emergencies, do not burden others and financial conditions are stable, and can live more calmly, achieve goals, and be happier. Me and you are even easier to invest because you can use a mobile device.

By investing, one can increase the funds they have and not be eroded by inflation. Currently there are many investment options, such as gold, mutual funds, bonds, stocks and property. However, before starting to invest one needs to consider the risk, potential return (return) you want to get, and time to invest. The property is well liked but selling it is relatively difficult and long. Stock is known as a profitable investment, but its value is volatile so it is more suitable for long-term investment. For that before investing, a person needs to measure the risk profile, whether he is someone who likes things that are stable, resistant to economic shocks, or even afraid of fluctuations.

In addition, needs to determine the investment time, whether you want to make long-term or short-term investments. By determining the duration, the funds saved to invest are not tampered with before the time is over. Because it could have been taken, for example a stock mutual fund, its value at that time was down.

I think mutual funds are suitable as an investment choice for novice investors, those who are new to work or those who are busy. Mutual funds are a place to gather public funds to be invested in securities portfolios by investment managers. The investment manager here for example is BNP Paribas Investment Partner. In its operations, investment managers work closely with custodian banks. The role of the custodian bank is to store, record, and administer investors’ funds and mutual fund securities portfolios, as well as complete transactions and calculate the net asset value of mutual funds.

By investing in mutual funds, the public does not need to worry because those who conduct transactions and manage funds are investment managers, all mutual funds and investment managers are overseen by the Financial Services Authority (OJK), the structure of mutual fund costs is transparent and can begin with 100,000 rupiah, and access Mutual fund purchases / sales are easier online and through mobile applications. There are four types of mutual funds offered to the public, namely money market mutual funds, fixed income mutual funds, mixed mutual funds, and stock market mutual funds. Money market funds have the least risk, low returns, and are best suited for beginners, while stock market funds generally have the highest returns, high risk due to volatility, and are more suitable for long-term investment.

19.   How to Identify Saham Gorengan

If you are stock trader, it is a common thing with the name of “Saham Gorengan”. Why is this stock called Saham Gorengan? Indonesian people are certainly no stranger to the name of gorengan as the complement food. Gorengan is cooked using oil.

Besides crispy, gorengan are also said to contained high cholesterol for those who consumed. As well as the gorengan food price, gorengan stocks also has same price characteristic. The price can go up high from the real prices. We also call this price increase with the term of ‘Menggoreng Saham’. This activity of driving stock prices and raising prices is generally carried out by stock dealers (Bandar) with certain interests.

On the other hand, beside quickly rising Saham gorengan also rapidly falling in price. Like Roller Coaster, the price is move quickly.This makes the price movements undetectable even with technical analysis. Therefore, Saham Gorengan said to be ‘cholesterol’ and not healthy for investor portfolios

# 1 Has a Small Market Capitalization

Saham Gorengan generally have a relatively small market capitalization, usually under Rp1 Trillion. With a small market value, the stock prices can easily move on the certain level of the price.

# 2 Unstable Transaction Volume

The next characteristic of fried foods is having an unstable transaction volume. This can be seen in the following chart, where only in certain price moment the volume increases.

#3 Irregular Volatility Prices

Saham gorenan often surprise investors. Same with tahu bulat, this type of stock is often fried suddenly (digoreng dadakan) the price can suddenly go up, and it suddenly go down as well.

# 4 Price Movement Not Supported by Fundamental performance of Companies

Stock price, naturally follow the fundamental financial position of the company. If the company makes a profit, it is only natural that the share price will increase.

However, this does not apply to Saham gorengan. Oftentimes, the price movements actually do not match the fundamental performance. Apart from inappropriate price movements, Saham gorengan can also be recognized by rumors. For example, the company was acquired.

It is common knowledge, that the bandar moves prices, also by throwing rumors. Retail investors who eat raw rumors, and buy shares, entered into the trap. Therefore be careful in choosing stocks.

Source :

  • Finansialku (2018). Mengenal Saham Gorengan.


20.Investing for Millennials

Millennials were born in the era of a more convenient way to get access to almost every aspect of life, from travel destination reservation services, buying various types of bubble tea, attending music concerts, until financial institutions.

This is one of the causes that most of millennials have high consumption rate. As they stick to the principle of “You Only Live Once”, Millennials focus on current indulgences more than the future threat. They prefer to spend their money to experience rather than invest for future asset and emergency funds.

Why Do Millennials Have To Invest?

Millennials may perceive that investing is risky. However, actually, NOT investing is actually riskier. Since most of millennials have not married yet, they do not really have a lot of responsibility financially to other people. Consequently, they have sufficient spare money to be invested for the future.

Saving in bank accounts are actually good for short-term necessity, but investing is a better idea to face the uncertainty in the future. Although saving in bank account offers us a lower risk than investing, money sitting in savings accounts is stagnant and subject to rising inflation, whereas investments can compound over the years.

For example, if you start investing $6,000 per year when you’re 25 years old, you’ll have a larger return than if you just deposited that money in a savings account or under the mattress.

Where To Get the Investing Knowledge?

Nowadays, technology development has provided us with the facility to gain information from any sources we want. Word of mouth about investing also contribute to our investment knowledge, Unfortunately, some of the headlines of investment news and people’s experiences seem to promise us to always be on cloud nine. Nevertheless, millenials should always be aware of the risks faced. It is caused by information overload that makes us harder to find a more credible source.

On the other side, lack of investing knowledge and experience can lead millenials to become fearful. Therefore, they have to be educated and well-informed about investment. Education not only can be derived from the internet. Joining business community that are conscious about investment is an effective way to get insights about investment products and the way to do the investment. Tips to Start The Investment

Quoting from Investopedia’s Editor in Chief, Caleb Silver, “The best day to start investing was yesterday, The next best day is today, millennials should do their investment as early as they could. Here are some tips for beginners :

  1. Investment is like a vehicle that brings us to our destination which is our financial goal. So firstly, we need to determine our short term and long term goals. Then, specify the goals with calculation, where to invest, and how much money to invest. Shortly, do the planning.
  2. Choose the most suitable type of investment according to your risk profile.

A risk profile

is an evaluation of an individual’s willingness and ability to take risks. is important for

determining a proper investment asset allocation for a portfolio

  1. Do not invest with your income leftover. Directly allocate a specific amount of your money to be invested in the beginning of receiving income. According to a research by Wharton Pension Research Council, millennials actually should spare at least 40% from their income to be able to enjoy a decent standard of life after they retire later. Unfortunately, on average, millennials only spare less than 10%. For a start, it is recommended to allocate at least 10% from your income for investment activity.

The emergence of technology based investment is very suitable for millennials who tend to be tech-savvy and seek for practicality. Financial planner of OneShildt, Budi Raharjo, said that the existence of investment application these days is good news , it opens a broader access for us to invest in an easier way. Before trying the application, firstly, millenials have to get familiarized to it. He also stated that users need to check if the application has been authorized by Otoritas Jasa Keuangan (OJK) or Badan Pengawas Perdagangan Berjangka Komoditi (Bappebti). It is very important due to the rising issue of fraudulence related to investment. Secondly, millenials have to pay attention to the investment instrument offered in the application and re-check whether its is trusted. For instance, if the instrument offered is mutual fund of a specific company, the users could confirm it to the particular company through various channels such as website or customer service.

21. The value investing bible  : “the Intelligent Investor” in a nutt shell

Intelligent Investor by Benjamin Graham is one of the most famous books that teaches us how to invest in a stock using value investing perspective, it is often called as the bible of value investor due to the everlasting knowledge that applied even up to 2019 from its initial release in 1949. The Intelligent Investor is proven to work well because one of the book’s disciple, Warren Buffet, successfully become one of the richest men in the world from applying what is taught in the book.

Accompanied with 640 pages, The Intelligent Investor carry over 20 chapters to give insight on what is value investing. Based on a survey, average reader would spend 10 hours to finish the book. As most people fails to finish the book or failed to extract the message from the book, this article will help you describe what does The Intelligent Investor wants you to do in a nut shell.

Speculator VS Investor – Chapter I

A lot of people simply called their selves as investor after they enter the stock market, but there is a big difference between investor and speculator. Speculator bought a business based on its price, they couldn’t care less about what is the business doing, they don’t even care if the business exists in the first place, they buy the stock in hoping that the stock price will increase which is why they are called as speculator. In the other hand, investor rely heavily on the underlying value of the business, investor only buy the stock that they know including what the business is doing, what future plan do the business have in mind, how are they expanding their business, investor buy a stock knowing that the business is growing and sustaining profit, thus why it is not called as speculative.

Be careful of Mr. Market – Chapter VIII

When you buy a stock using value investing method, you knew what your stock are worth, so don’t listen to what the market says, or in The Intelligent Investor it is often called with Mr. Market. When Mr. Market says your stock is worthless but you know that it worth something, instead of listening to Mr. Market, used it as an advantage to buy the stock cheap while speculator sell the stock, and when Mr. Market says that your stock is going even higher but you know that you have reach the intrinsic value, than sell the stock in favour when everybody else is buying the stock high. The point is, don’t listen to Mr. Market, instead, use Mr. Market as your salesman.

Margin of Safety – Chapter XX

Margin of safety is defined as the margin from the current market value to the fair price of the stock, the bigger the margin (of course when the market price is bigger than the fair price) the better the stock is for value investor. Suppose a stock fair value is $100 and the current market price is $110, that means you have 10% of margin of safety, The Intelligent Investor suggest that you should have at least 20% of margin of safety to decrease the risk of your investment.

So, now you know a little bit about The Intelligent Investor, haven’t you? To understand more about the book, the author of the article suggests you to read the revised version of the book as it has been commented by lots of expert including the book’s author greatest disciple, Warren Buffet. This book also helps you determine whether you are n defensive or aggressive investor, so why wait longer?

22.  Investing To Help Yourself and To Help Others

Investment probably not kind of word that generally heard by the middle low society. If we see the capital market in IHSG, all the companies provided are kind of company which has reached the IPO. Technically saying, it is a big company at least. For getting high amount of return, you need to invest big amount of money with high risk and the ability to manage the fund we invested.

Some people may think, they prefer to send their money to an orphanage rather than investing it in some companies or making securities account. It is not a kind of apple to apple comparison, but both parties think about the return they can reach after doing investment or alms.

By doing the investment, the expected return is of course the percentage of number of stock we invested and the company can perform. But the expected return form of reward from God (pahala) is more preferable for the one who does the alm.

It looks like they both are always separated. If you want to invest, it means you won’t get reward from alm. Same thing happens if you want to do good, you won’t get return from the money you get out.

But then, Amartha is coming as a fintech startup which building a bridge between those two things we discussed above. They provide the Peer to Peer (P2P) lending platform for the people who would like to invest their money, but at the same time would like to help middle low people to grow their economy condition.

Amartha meets the investor with the middle low individual (not a company) who needs funding for their business or even start running business. So the money given won’t be burn out only for their needs. That is why there are mutualism symbiosis in this investment tools.

The investor will gain two things: the return of investment itself, and also the good feeling of helping others. And the person who get investment will get two things too: access to easier funding system rather than bank, for running their business and circle of investee to do the coaching clinic session and turning back the money. This system will help investee to manage the money they gained, so that the investment will be returned to the investor with some additional amount of money given by the investee.

Amartha is not only helping the investor to get the return, but also helping the middle low economy society who has no access to funding for doing their business. At the same time, the investor who would start being an investor with not really big amount of money will easily helped and feel that with their “amount” of money, they actually can help others directly, or we can say it social impact from the investment.

23. Investing in Volatile Market Condition

Living from pay check to pay check is horrible, so many financial planner or advisor gives advice for us to invest now rather than savings. Saving is great but investing gives more significant outcome for the investor. A penny invested is worth exponentially than a penny saved. Investing is making passive income where money will work for you. Now people start shifting from saving society to investing society.

In Indonesia, there is a campaign called “Yuk Nabung Saham” (YNS). YNS is a campaign started in 2015 to encourage Indonesian society to start investing in stocks. But how if we don’t know the way we can get the best result when investing? Many books and stock market advisor tell us to do value investing. Value investing is based on the fundamental analysis where the investor believes that with a good fundamental, a company stock price will rise as the company grow.

Is value investing is the best way to get financial freedom? In the long term, yes. But today we often heard about recession, slow economic growth, and other bad news about economy condition which affects the stock market. Stock is categorized as a high risk assets, and when there is a turbulence in economy, politics, or other issues, the stock market will likely to crash. So how do we handle this conditions? Does value investing still the best way especially if we know that we are facing a recession or bad economic conditions? Let’s check some other way of investing and get to know which one is best for you.

Many books has written to guide us, a new comer in stock market, to do investing and most of them are value investing. As we know, value investing are based on the fundamental analysis of the company. Many successful investor has already proven that value investing is one of the best way to get financial freedom. For them who already experienced in stock market, or have large amount of capital it’s easy to do value investing and when the market is in good condition they can exponentially increase their wealth.

However, many of the retail investor now haven’t reach that level yet. Some stock market expert may also give advice to do trading. Trading is good way to tackle bad economic effect because trading means you make money in much more short term. Combining trading and value investing is great for you who is often checking the stock market. But it is not compatible for you who is busy. Putting money on mutual fund in bad economics condition also isn’t great because you still may experience loss.

The last option for you that don’t like trading but still want to accumulate wealth in bad economics condition is to become dividend investor. We know that in the stock market there are 2 kinds of gain capital gain and dividend. Capital gain is what you want when you do value investing, and somehow we often forget about the dividend because maybe not all company gives cash dividend to their shareholder or many investor (especially low income and older investor) used the dividend for consumptions. There is a term usually used in U.S called DRIP or dividend reinvestment plan. Unfortunately, Indonesia hasn’t had this feature yet but we hope as the investor in Indonesia grows the feature will be available in the future.

DRIP is an option offered by the company that allows shareholder to automatically reinvest their cash dividend in the additional shares of the company. So when you received a cash dividend, your dividend is automatically converted into the stocks. So what should we analyse when we want to be dividend investor? Firstly, it is the dividend yield. As dividend investor, you want to have a high yielding dividend stocks but it is not the only factor. In U.S there are category called Dividend Aristocrat. Dividend Aristocrat is a list of companies that not only gives dividend consistently but they increase the size of payouts continuously. So what I recommend, you can have a minimum of 3% of dividend yield stocks but they continuously increase the dividend for the next period continuously and what you do is you used the cash from dividend to reinvest in that stocks. If the cash dividend isn’t enough to purchase one lot of stocks you can add your own money for investment to buy the stocks.

What’s the advantages of becoming dividend investor especially when market crash? It’s simple, when you can’t get capital gain because the stock price is falling, you get profit from the dividend aristocrats. As the price falls, the dividend yield will rises, and if the recessions continues and the stock price falls deeper, the yield you are getting is higher. So you may stay calm when the market crash because you still get profits from high dividend yield. Secondly, when you reinvest your dividend into the stocks in the long term, your return is much higher than when you just constantly invest without reinvesting your

See figure above, Assuming we invest 10,000 dollars with 1,000 dollars contribution monthly for 10 years. We invest to Company A stocks with $40 price (Expected increase 10% annually), 3% dividend yield (Expected dividend growth rate 5% annually), and with 10% of tax. We can see that with DRIP we are doing the 8th wonder of the world, compounding interest and saw higher result than when we just consume our cash dividend. The difference is around $21,000 where you can get approximately $238,000 with dividend reinvestment plan and $217,000 without dividend reinvestment plan.

24. Eight wonder of the  world… compound interest  

Stock! Bond! Mutual Fund!…

Your friends, your colleagues, you family, your relatives talked about it. Investing is now widely discussed. Everyone hopes to have the money to buy a thing with a little sacrifice. They want not to work but get the money every second, every minute, and every hour. Just put your money somewhere else and it will grow bigger everyday. It will take a lot of energy and a mind to work at office make us less time to enjoy life. But, if we are not working we can’t live a life because our needs that have to be completed starting from food, transportation, housing, clothes, and many more. So, what I’m supposed to do to make a living?


Someday, I met my friend which have a knowledge about investing, He says to me “Why don’t you starting now to investing?” he keeps persuade me to start investing. But, here I’m just smiling because I know that it is not easy to start investing. Then, he started to tell me a story about world wonder number 8 according to Einstein. While thinking, I’m ask him about what it is about because it’s a word which is the first time I’ve heard. He told me that it was compound interest. He told me the effect when I’m starting to invest that the value of money which you invested will be increased exponentially by the time. It’s more profitable than you are saving in the bank with low interest rate that is not reach 1%. He also stated to me, if I invest in a stock let’s say it has a return approximately 15% in a year, it will compound at a time. With a constant growth rate you can double it for 7 years, it’s really promising.

His words really opened my mind about investing. In fact investing is indeed profitable but sometimes we don’t want to start and are afraid of the risks. Risks are something that we can avoid, but don’t forget about the word saying “High Risk High Return”. Whether risk or return have to be balanced according to our assessment of risk itself. When we are starting in a world of capital market the things that we have to do is learning and learning. When we are learning more and know the condition that happen your eyes will see whether the stock is good enough or not. someone once said that when you are starting to invest, you will feel the happiness and the pain in the process but learn for it to be better. Finally, starting to invest, understand it and earned it.

25.  Stocks or Mutual Funds? What is the best choice for investing

Nowdays, Yuk Nabung Saham (YNS) advertisement is trending. YNS is campaign from Indonesia Stock Exchange (IDX) to invite people as potential investor to invest in capital market  by buying stocks routinely and periodically. Likewise, many advertisements invite people to invest in mutual funds.What is the best choice for investing?  Especially for you new investor so that you can decide the kind of investment that suits you the best. Here are the things you need to know before deciding where to invest.

  • Understanding what are stocks and mutual funds

Stocks are an equity investment that represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets. As a stock investor, you have control to pick and monitor your stocks considering risk and return you will get. While,  mutual funds are an investment program funded by shareholders that trades in diversified holdings and is professionally managed. With an investment in mutual funds, you do not have control about the choice of stocks because fund manager pick and monitor also allocate the stocks so that it is important to choose mutual funds with well trade record.

  • Risk and return

The principle of high risk high return is a familiar term in investment. In investment, risk is potential loss from investing in stocks while return is the expected profit from investing in stocks such as dividends or capital gains. The risk of mutual funds is low because the instruments are managed by fund managers who already have knowledge and experience about investing and applying diversified stocks. On the other hand, stock investment is much riskier than mutual fund investment because you manage your own portfolio. You have to do extensive research before investing, especially if you are a new investor. With this high risk, it is natural that you can get higher returns when investing.

  • Time

If you choose stock investment, you need a lot more time to research into your stock while in the case of mutual funds, you can be passive because the fund manager who manage your portfolio.

  • Fee

In stock investment, you are only charged when bought or sold. While in mutual funds, you are charged transaction fees and operational costs (consist of management fee).

If you are an investor willing to take high risks and have time to understand the ins and outs of the company and have the desire to learn about stocks, then stock investment can be the right choice for you. But if you are an investor that afraid of investment risk and do not have the time to manage stocks, mutual funds can be an option.

26. Alternative investment gives lower risks?

Broadly speaking, the main objective of investors is to make investments aimed at obtaining financial freedom according to their respective views. But among the many perspectives on financial freedom itself, all investors certainly need a medium to make investments and usually, they have looked to equities, bonds and cash instruments as a place or medium to put their money in the hope that these instruments will produce a return on investment returns. But not every time the invested instruments will give positive trends continuously, there are times when economic conditions force them to experience a downtrend even in a very bad situation. In recent years, there has been a period of very-low interest rates around the world that made investors did not get returns that match their expectations on their bonds and also no returns on their cash investments. The volatility that occurs in the market also makes many large investors (institutional investors) disappointed with the situation.

These bad conditions force long-term investors (for example: pension funds) to find investment instruments that can provide higher rates of return by investing their capital in Alternative Assets. Alternative assets or alternative investment is a general investment that is categorized outside of standard stock and bond investment and also has the potential to be unaffected when the broader market experiences a certain condition, such as potentially to be zig when the broader markets become zag.

The purpose of investing in alternative assets is to mitigate the volatility of the portfolio which serves to protect the value of the portfolio and also boosting portfolio returns whose system is not directly tied to the performance of the stock market. This is proven when markets experience a bad condition in the first week of 2016, alternative assets tend not to be affected or even not affected at all, this also becomes a good thing too because by adding alternative assets, it will make the portfolio diversified.

Alternative assets can play a part in strategies used to increase return on investment for investors when equity returns are low or negative, and also to diversify investment risk profiles. The most popular alternative investments are:
Futures or options contracts, including carbon credits and foreign exchange

Real Estate
directly or through tax-efficient pooled investments such as Real Estate Investment Trusts (REITS)

Insurance Risk
Bonds linked to events that lead to insurance losses, such as natural disasters

Hedge Funds
Pooled funds that speculate using credit or borrowed capital

Fine art, wine, stamps, classic cars, coins, antiques, jewelry, or other tangible assets with strong fan-bases willing to pay a premium

Materials such as grains, metals, or basic materials

Interest in alternative capital is growing and as a result, currently, it makes up around 12 percent of reinsurance market capital, according to Aon’s January 2016 Reinsurance Market Outlook report, with nearly $69 billion in alternatives as of September 30, 2015. At current growth rates, this is set to reach $120 – $150 billion by 2018.

However, as explained earlier, not all investment instruments will always experience a continuous uptrend, there will be a time when the risk is also associated with alternative assets. For example, if collecting classic items such as art, wine or cars, there is a possibility that the price will decrease due to changes in fashion. A concrete example was also experienced during the sub-prime mortgage crisis of 2007-2009 which proved that alternative investment can also be very risky. When the U.S. housing bubble burst beginning in 2007, very few markets are affected by these conditions, as investors liquidated nearly every non-cash asset (including real estate, art, and even classic cars – to generate cash that can be used to protect themselves from collapsing credit markets).

Of all the conditions that have been exposed above, diversification is something that must be done to maintain portfolio value well, one of the ways that diversification can be done by investing in alternative assets that are categorized outside of standard stock, bonds and cash investments that tend not to be bound to conditions market in general. With this, of course, we can save the value of the portfolio when the market is in a slump and can also boosting the value of the portfolio.

27.Start Investing in Stock, NOW!

Since a long time ago our parents always tell us “Menabung Pangkal Kaya” and the term is still true until today. However the problem is lies on where we save our money. If we save our money in a piggy bank (celengan) or save it in conventional bank sure we feel like we have spare money to spend. However when we save our money in a piggy bank or in conventional bank, what we actually do is we save our money now and spend it later, the amount of money will be the same from the beginning until the end. Which means no profit at all, which means we are not getting any richer by doing that.


Where there is nothing wrong in doing that, there is actually another option of savings where we will actually getting richer. The option is to start investing in stock. Many people still believe that investing in stock is only for professional people, it will be too risky if we ordinary people doing it ourselves. However all of that is not true because the only way people can be a professional on stock investment is through experience, trial and error, everyone who is now a professional must have gone through several failures before. And for risk? Risk is not only exist on stock investment it lies everywhere throughout our lives, it is part of living. So there is nothing to worry about.

Here are several benefits on stock investment:

  • Doesn’t require large capital
  • Can be traded easily
  • Has unlimited profit potential

If you still scared or not sure, here are some simple tips to help guide you before actually start investing in stock (based on my own experience):

  • Start small, then work your way up

There are many stock products that cost very cheap, only Rp100 per shares. If       we required to buy 100 shares then the total cost will only be Rp10.000. There    are many products available on capital market that we can choose from, so we       can adjust it with our budget. My suggestion is to start small first, provide        capital around Rp100.000 – Rp500.000 to beggin. Then when you become            more confident on how to choose the right stock product, start adding the         money that you will be used to invest in stock.

  • Not investing in only one stock product

From my experience it is better to buy more than one stock product. At least if      one product experience loss, we still have another option. Investing in more        than one product also enlarge our possibility to get profit.

  • Know the right time

There is no such thing as bad product, you just pick the wrong time to buy it.         Make sure you know and learn on when is the right time to buy a stock product. From my own experience a stock product that once experienced loss,       is also a product that gives me pretty big profit on different time.

  • Keep Learning

It is necessary to keep learning on how to become a good investor. For that            you can do simple things such as: ask your friends or someone who already do        stock investment, read article or news on the internet, attending workshop, etc,      and the most important thing is to learn from your own experience.


28.  How Fresh-Graduate Salary can Earn More Money

Some people said that fresh-graduate salary isn’t far with the minimum wage. This is not right, but this is not wrong too. Whatever it’s right or wrong, the point is those wages is considered as ‘low wage’. Related to the fact that a lot of people considered this as low wage, they tend to have the perception that people with wages that categorized in minimum wage or fresh-graduate’s have no chance to gain more money by investing. These are the steps to prove that you are wrong.

  1. Saving since Baby

Saving since baby doesn’t mean literally since you’re baby. But saving since baby means that you really should save. People always have the ability to save some money, but people don’t always have enough urge to spare their money for saving.

It’s extremely important to start from early age. This is because by all the lifestyle and trend happening throughout the time, people need to have enough intention to block themselves from the bad lifestyle. And these couldn’t be happened if we haven’t start saving from early age. We need to exhibit this habit as early as possible in order to prepare ourselves with the future.

  1. Expense Post

Lifestyle is what caused majority of people to have no ability to spare money. Especially people with minimum wage and fresh-graduate salary, they tend to have the perspective that their available money is already minimum, therefore there will no money left for it to be saved. But this is perfectly wrong, people can always save their money if they could control themselves, especially in doing secondary spending. People will have spared money if they could budget their spending since the beginning. The other way is you could make the list of the spending you’ll done and strive to stick to the budget plan.

Expense post means that you make a proportion with certain percentage to every spending that you’d done in the future. Most effective and easiest way to make this proportion is through the historical spending. But not only by historical execution, but you also need to analyze every spending. What you should analyze is what element that you could reduce or even eliminate and also regarding what element that you want to add. If you haven’t start investing, it’s really recommended if you start to proportion your money to be invested.

  1. Learn and Try!

After you proportion your money specifically for investing, then what now? What are the types of investing that you should dive in deep?

First, you should know yourselves. You should identify whether you are risk averse or risk tolerance, whether you have enough patient to wait for long-term condition or not, or even whether you want to do the investing by yourselves or by other more professional people. You just need to spend some time on exploring yourselves.

Next, what you could do is to explore the chances. You need find what type of investment that you should do. You could learn from reading, formal classes or even as simple as YouTube. There’s always suitable type of investing for every combination of your trait.

Last, what you should do is everything. You should collect every urge to try to execute. You should congratulate yourselves if you gain some money. You should brace yourselves if you have some loss. Then, you should collect every urge to try again. And so on and so on.


29. Ivestments for Millenials 

If you are a millennial, you should be investing aggressively. Now is the time to begin accumulating money and putting it to work to save for the future.

For those who haven’t invested anything before, the sheer number of investment choices is overwhelming. The impulse to delay decisions and keep your money in cash is understandable, but strive to overcome it.

Let’s assume you have $10,000 you can set aside. What should you do with that money? Well, it partially depends on how long you plan on setting aside that money. Here are some popular investment options, broken down by the time you should expect to leave the money alone.

Investing and Savings Habits of Millennials

Here’s a look at millennials and their investing and saving habits these days:

Retirement Saving Isn’t Their Top Priority Right Now

Not surprisingly, putting aside cash for retirement is not top of mind for most millennials. They are too busy battling with debt. The 18th Annual Transamerica Retirement survey revealed that 45% of millennials marked saving for retirement as a financial priority. Meanwhile, 67% of millennials named paying off debt as a priority.

Millennials Are Risk Averse

Many millennials may recall the major stock market decline in 2001 and the financial crisis in 2008 and 2009. They may have memories of loved ones losing jobs and losing a lot of money in the markets. Despite a lengthy bull market in recent years, these memories may impact their investing approach and cause them to act cautiously.

A survey from Bankrate revealed that 30% of millennials see cash as their favorite investment. All other generations said they preferred stocks.


They Expect to Retire On Time Or Early

Research shows that millennials have no intention of working into old age. While 69% of baby boomers said they expect to work past age 65, 58% of millennials said they plan to be retired by that age, according to the Transamerica Retirement Survey. In fact, many millennials surveyed said they hope to retire even sooner.

Millennials are DIY Retirement Savers

More than any other generation, Millennials know that they will likely be responsible for saving for their own retirement. Transamerica reported that 53% believe that that the primary source of retirement income will be from 401k, IRA, and other savings accounts, rather than defined benefit pensions. Thus, they have started to save earlier and are more likely to discuss saving, investing, and retirement planning with family and friends. More than half of Millennials who are offered a 401k plan will contribute to it, a higher rate than other generations.

Millennials are also slightly more likely than other generations to have a written retirement plan, the Transamerica survey said.

Millennials Expect to Live Longer

Millennials expect to have a much longer retirement than other generations. Not only do they plan to retire early, they expect to live much longer. The Transamerica survey revealed that 17% of millennials expect to live past 100 years old. Meanwhile, only 11% of Gen Xers and 9% of baby boomers expect to be around that long.

If millennials expectations regarding retirement and life expectancy hold true, they could be the first generation to have retirements that are longer than their time spent working.


They Have Some Catching Up to Do

So Millennials hope to retire early, and they expect to live a long time. This means they have some work to do to get their retirement savings on course. A report from The Center for Retirement Research at Boston College says that millennials have a wealth-to-income ratio of 40%

That means that their total net worth is only 40% of their current annual income. That’s lower than the 53 percent reported by Gen Xers and 47% by baby boomers when they were the same age. Boston College notes that millennials are weighed down by student loan debt, stagnant wages and a high cost of housing.


Socially Responsible Investing Matters to Them

There’s been rising interest in so-called “socially responsible” investing, which takes into account social and environmental good as well as overall return. This is driven by an increasing number of millennials starting to invest. Morgan Stanley last year reported that 86 percent of Millennial investors are very or somewhat interested in sustainable investing, compared to 75 percent for the entire population.

Morgan Stanley said millennials are twice as likely as the broader investment population to invest in companies targeting social or environmental goals. Also, 90 percent of millennials want to see sustainable options in their 401(k) plans.


Millennials Like Simple Investments

When millennials do invest, they like to avoid complication. Millennials are a significant driver of the push toward index mutual funds, which have low expense ratios and are merely designed to track the movements of individual indexes or the overall stock market. (Passive funds now make up about 30 percent of the market, according to Moody’s.)

They’ve also taken advantage of new exchange-traded funds and target-date mutual funds. These funds automatically shift investments appropriately as the investor gets older.


Advice To Millenials

So what’s the upshot for the millennial generation? Millennials aren’t doing poorly. They face challenges that are not necessarily their fault. Clearly, they need to boost their rating of saving and can do so by working to reduce their debt load and becoming slightly less risk-averse.

Those that have 401(k) plans available to them should take advantage and contribute at least to the level needed to get the maximum in matching funds from their company. Millennials would also be wise to explore the use of a Roth IRA to gain tax-free growth on investments. Meanwhile, they should bolster their emergency funds.



Figure out how much you can invest

Separate your short term investments from your long term investment strategies

Pick your level of risk

Pick what goes into your long term retirement investment accounts

Invest as much money as you can in tax-advantaged accounts

Invest early, often, and as much as you can