Investing Insight

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The Road to Financial Freedom

by Agustinus Calvin  – Team P-All Right Investment

Everyone expects and hopes to have financial freedom. It gives us the ability and privilege to enjoy living our life without having to work. The majority 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? The answer starts investing as early as possible.

making investment progressively, we can take the effect of compound interest that can make our investment value increase exponentially as more time passes. Assuming we make a one-time investment in an asset (can be property, stocks, bonds, etc.) with an average value increasing 10 % annually, we can double our investment in just 7 years. We can make our asset value grow twice as much without doing anything and in such a short time. And if that asset’s value has a constant growth rate, we can get 5 times our initial value by just holding it for another 10 years. The return that I mentioned before is by making a one-time investment, imagine what we can get by making a progressive investment throughout those years. So now you can see how important it is to make an investment as early as possible and do it progressively.

As we have discussed, the way to achieve financial freedom is to start investing right away, but the next question is how do we make a good investment? Wel,l the truth is there is no absolute way to make a perfect investment that gives us the highest growth without any risk included. We have to come up with our own way to invest our money, because as it is said “there are a thousand ways to Rome”, everyone has his/her own method to become a good investor. But some guidelines for you that have no idea about investment here are some tips (based on my experience in the stock market for 3 months) to help you understand the keys to become a good investor:

  • Makethe investment that you understand. To become a good investor, it means holding your money in certain assets for a long time. So, before you put your money in a certain asset, be sure to know the important aspects about that asset growth. As an example, if the asset is a stock of a company, check the company’s reputation, business model, market growth, etc.
  • Learn from your mistakes and move on. A good investor never stumbles upon his/her wrong investment then gets traumatized. Persistence and the will to learn are the traits that an investor must have and develop to become a good investor. It is acceptable to make some mistakes in investing, but you have to be sure to learn from those mistakes.

Be aware of the market. This tip works best if you invest on relatively volatile assets that fluctuate with the change in the market. As an example, if you want to invest in gold, keep yourself updated about the things that may affect the market (value of gold). If an investor turns a blind eye towards the market, it is the same thing as riding a wild horse with your eyes close (you are putting yourself on a great risk). 
Finally, you have the big picture of what is achieve financial freedom and how to achieve it. Now all that is left is to start investing and work your way to become a good investor!

 

How A Beginner Starting Her Journey in Capital Market

by Istamitra Pratita Pramono – Jagoan Cuan Capital

My journey started when I am interested in capital market and try to find out what the capital market is, how to enter it because long before now I thought the capital market will give a high return quickly. In 2017 at SBM ITB was held an introductory event to the capital market while creating an account to be able to play in the capital market. I followed the directions from the organizing committee by paying Rp100,000 as the initial deposit for balance. At that time, I was taught the techniques about when to buy and sell stocks at the right time. I was taught technical analysis, namely reading the “peak” and “valley” charts.

After followed the seminar, I tried to implement my knowledge that I have gained from the meeting. I tried to enter my account and started to choose the shares. I started buying shares that were only costs Rp435 per share. At that time, the shares that chosen by me is came from my intuition and feeling. It turned out the shares I selected after a few months rose to Rp795 per share. But after that it remained stable at the level of Rp700 – Rp800.

 In seventh semester, I entered capital market class, the lecture mandated us to make a portfolio that consists of several sectors. I chose to hold infrastructure and fast-moving consumer goods. I chose this sector because I thought that this sector will have a good prospect while the economic global was volatile in that time.

I have to choose which stocks will bring high return and low risk. This is quite confusing since there is a theory that stated high risk high return and low risk low return. So, what kind of method should I use? because I believe I could not predict the market condition. Then, I decided to read the news regarding some fast-moving consumer goods (FMCG) and infrastructure companies. I decided to use this method because in my assumption the news will give insights about condition of a company and the market condition. I keep reading the news from some reliable article sources. After that, I chose the best shares based on information from the news.

I could say as a beginner in capital market, my method in selecting stocks is reliable. It proves from the result; my group consist of 3 people who doesn’t know anything about the capital market turned out to be the highest among the other groups at that time. Even if the accumulated return that we get is still worth minus. But my portfolio is above the LQ45 index and below the JCI.

I realized if we are choosing stocks based on information from the news it could be a big mistake because we could not predict what will happen to the company later. If we analyzed only from the news, we cannot find out the fundamental condition of company that we chose.  I have learned each stock has different characteristics including risk and return. Each stock has a different calculation. For example, we can use geometric and arithmetic to calculate return. For calculating risk, we use variance.  We also must consider this thing. Therefore, the stocks that we choose are more accurate.

Finally, I learned we don’t have to be scared to decide whether enter capital market or not. You don’t have to think million times to enter capital market. Just prepare your fund, confidence and some basic knowledge. If we don’t try we won’t feel the pain. Never be afraid of being wrong.

The P/E Ratio: A Broader View
by Bagas Naufal Prayitno – Intelligent Bull Capital

In his book “Security Analysis,” which was first distributed in 1934, Graham proposes that a P/E proportion of 16 “is as high a cost as can be paid in a speculation buy in like manner stock.”

Does that mean all 16s have a similar value? No.

“This does not imply that every single basic stock with a similar normal income ought to have a similar value,” Graham clarified. To Graham, P/E proportions were not an outright proportion of significant worth, but instead, a method for building up a “moderate upper limit” that he felt was relevant with the end goal to “remain inside the limits of traditionalist valuation.”

Nowadays, there is still a lot of analysts which still concludes whether a stock is at a bargain by looking at its P/E Ratio which is below average. However, according to William J. O’Neill, the founder of Investor’s Business Daily, asserts in his 1988 book “How to Make Money in Stocks.” He concluded that “contrary to most investors’ beliefs, P/E ratios were not a relevant factor in price movement.” Mark Minervini, 12 times US investing champion and the author of “How to Trade Like A Stock Wizard” also states the same thing in his book. He argues that growth stocks are possibly valued at a P/E ratio which may seem overprice even before it advances even higher and stocks with low P/E ratio may even go lower and lower so it’s not really cheap buying a stock at a low P/E ratio. Simply, they conclude that good stock tends to be valued at a premium price compared to a mediocre or bad one. There are a lot of examples in Minervini’s book of stocks that declined even lower after it hits the 52-weeks low P/E ratio and in contrary, a lot of multi-bagger stocks that make their biggest advance at a high starting P/E ratio.

A good stock’s price tends to rise first when big money with a better understanding than most retailers of that particular stock buy at a big quantity. They know that a good event in the future will happen, for example, a jump in earnings so in the end, the EPS will adjust thus the P/E will also adjust to a more rational number. In another way, a stock’s P/E ratio can decline and thus seen as a bargain because the price has declined caused by a massive selloff from the big money because they know or predict in the future the EPS will decline and thus the P/E will rise again.

Who knows what the future hold. Analysis should be done through a complete measure and we have to take a broad view of anything, as in P/E ratio we should not only look at the numbers itself, but we have to take it further, as in why a stock is constantly valued at a higher P/E ratio while some stocks are a laggard and always valued at a low P/E ratio. Do not be afraid of a stock with a high P/E ratio if we are sure about what we are buying and do not be so happy about buying a stock at a so-called bargain price just because it has a low P/E ratio.

Investment for Newbie

by Efan Wiranto – Jagoan Cuan Capital

Indonesia is now one of the fields for local and foreign investors because it has potential and every year the development of investment in Indonesia increases. Data in August 2018, ownership of local investors as much as 52.71%, exceeding the ownership of foreign investors as much as 47.3%.  Right now is the right time for all who are interested in investing because the growth of local investors increasing

But, for a layman in the field of investment and have an interest in investing, you will definitely be confused in determining where the money we have to invest is due to the lack of knowledge about investments before

Therefore, I have found several things that might be considered before investing in a layman who does not know about fundamental analysis and technical analysis

The first is that it is safer to invest in a company that is already known and used by many people or you could say that a company that has a large market share, for example, is BBRI, TLKM, HMSP, GGRM, UNVR etc. In addition, stock diversification is also a mandatory thing to minimize risk.

Quoting from the website www.listenmoneymatters.com, Think long-term> Invest what you can afford> Set it and Forget it, is what I have implemented and have so far been successful. For those of you who are unfamiliar in investing, it’s better to start now and be able to learn from experience, because the experience is the best teacher.

Saving Money Vs. Invest Money

by Felicia Luz C. Ina – Intelligent Bull Capital

College student, especially when they are far away from home, have to maintain their personal cash flow. Saving money has been a popular word, basically, because we can’t predict the future so it can be our financial securities in case of an emergency. As a millennial generation, I expect the highest return to my savings and the bank account is not the answer because it was not challenging and easily gets me bored. The return, interest income, in saving account is very small and constant over time makes our money grows slowly. The positive thing is the return could not be negative since the risk is small.

Investing is the process of using your money, to buy an asset that you think has a good probability of generating a safe and acceptable rate of return over time. The return is directly proportional to the risk that we want to take. The higher risk can lead to the higher return or negative return, which means the investment results decrease the wealth of the investor. Being a capital market student teach me how to invest in the form of stock. A stock is one of the cheapest investments we can do without never get bored or take a too higher risk because we don’t need to invest all of our money and can adjust the investment to reflects our time frame from investing, risk, tolerance, and financial situation.

Until now, there is a common fallacy among many people that they need a huge of money to start investing in the stock market. The truth is you can start investing with as little money as required to buy a burger. There are a number of stocks whose price is less than 6000 IDR/shares. The price doesn’t reflect the potential growth of return you will get because each company has their own stock characteristic. This feature made a stock more preferable to us, as a college student who doesn’t have a huge of money, rather than other forms of investment such as gold and real estates.

The other benefit to preferred stock investment is stocks are kind of hot money so if the market goes down, we can take back our money. The stock is a liquid investment but still not liquid as fresh money. This characteristic really helped me because nowadays the saving account instrument have the same function as fresh money which I can use it easily and the goal, to save the money, is not accomplish. To sum up, investment in stock more preferable than just put your money to the saving account because through the stock market, we can mix our portfolio based on the risk, return, and period we want to take.

 

The Important of an Investment Plan

by Michael Justin W – Saratoge Investama

Nowadays, there are many people who know the importance of investing but only a few people have an investment plan. Even though the investment plan has a vital role because of there are many investment products offered such as; stocks, bonds, and mutual funds. Investors must be wiser in choosing which investment products are suitable. Having an investment plan will keep you on the right path to achieving your financial goals. Here are the steps to make an investment plan:

Determine what’s your goals are

The first thing you have to do is determine what’s your goals are. Set the Time Frame Measure Risk

You have to decide on the purpose of your investment, for example for security reasons, to buy a house or for retirement fund. After that, you have to determine how much you are going to need.

In general, investment products have been divided based on their respective periods, including short-term (1-2 years), medium term (2-5 years) and long-term (> 5 years). You must decide when these funds will be needed.

Each investment program must contain risks and there is no investment that is free from all risks. Here investors are required to choose the right investment products based on their risk profile, there are 3 kinds of risk profiles; risk averse which tends to invest money in safe investment products even though it has a small return, risk neutral which tends to limit risk, risk takers who tend to allocate their funds to high-risk investment products. Determine the Amount of Money Invested The last one is you must determine whether you will invest in a lump sum, or routine every month.

 

 

The Importance of Diversification

by Safira Amalia – Jagoan Cuan Capital

“Don’t put all your eggs in one basket” This proverb is certainly familiar in the world of investment. In investment, this proverb means that investors do not place all their funds (capital) in one investment instrument.

Investment diversification can be done by buying stocks from different companies and different sectors or invest in several investment types such as buying bonds, mutual funds, stocks, or buying real assets such as gold, real estate. The key is investing in several types, not just one.

By doing stocks diversification in different sectors, the stocks collected are uncorrelated. So if there are stocks whose prices are down, the value of the portfolio is not declining much because in other sectors it is not affected by these risks.

In investing, investors are facing risks. Through diversification, specific risks to companies or industries (non-systematic risk) can be reduced. With reduced risk, the losses can be minimized. Doing diversification doesn’t mean investors can avoid loss since risk is uncertainty and can happen at any time.

In doing diversification, investors need to be adjusted with their financial conditions and also their risk tolerance, so it can well diversify based on investor’s risk tolerance and reach investor’s financial target.

A Penny Saved is a Penny Earned

By: Intan Alfiyyah Fauzi – GoSip Cuan Capital

To be wealthy, only by earning money and save some bucks isn’t enough. You should do more than that by hold onto the money you earn and make it grow. How you can grow your money? Investment is the right answer to help your money grow.

It doesn’t matter how old you are or how much money you have, you should start investing now even though you don’t know much about it or whether you’re worried about what the markets are going to do. Why? Because investing is easy to do and you’ll get a lot benefits from doing it. The main benefits of investing come from long-term growth. It’s about one day in the future having the financial freedom of being able to support yourself without an income. Let’s take an example, at some point you will stop working. The only question is whether you’ll be forced to stop before you’re financially prepared or whether you’ll be able to choose to stop on your own terms.

Today, investment can be done by invest small amount of money. Only one click on your smartphone, investment can be done easily. It’s all about your eagerness. Remember, it’s like a penny saved is a penny earned. So, all of this is about you, yourself, and your freedom. Do it now or be late again.

 

The Road to Financial Freedom

by Agustinus Calvin  – Team P-All Right Investment

Everyone expects and hopes to have financial freedom. It gives us the ability and privilege to enjoy living our life without having to work. The majority 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? The answer starts investing as early as possible.

By making investment progressively, we can take the effect of compound interest that can make our investment value increase exponentially as more time passes. Assuming we make a one-time investment in an asset (can be property, stocks, bonds, etc.) with an average value increasing 10 % annually, we can double our investment in just 7 years. We can make our asset value grow twice as much without doing anything and in such a short time. And if that asset’s value has a constant growth rate, we can get 5 times our initial value by just holding it for another 10 years. The return that I mentioned before is by making a one-time investment, imagine what we can get by making a progressive investment throughout those years. So now you can see how important it is to make an investment as early as possible and do it progressively.

As we have discussed, the way to achieve financial freedom is to start investing right away, but the next question is how do we make a good investment? Wel,l the truth is there is no absolute way to make a perfect investment that gives us the highest growth without any risk included. We have to come up with our own way to invest our money, because as it is said “there are a thousand ways to Rome”, everyone has his/her own method to become a good investor. But some guidelines for you that have no idea about investment here are some tips (based on my experience in the stock market for 3 months) to help you understand the keys to become a good investor:

  • Makethe investment that you understand. To become a good investor, it means holding your money in certain assets for a long time. So, before you put your money in a certain asset, be sure to know the important aspects about that asset growth. As an example, if the asset is a stock of a company, check the company’s reputation, business model, market growth, etc.

 

  • Learn from your mistakes and move on. A good investor never stumbles upon his/her wrong investment then gets traumatized. Persistence and the will to learn are the traits that an investor must have and develop to become a good investor. It is acceptable to make some mistakes in investing, but you have to be sure to learn from those mistakes.

Be aware of the market. This tip works best if you invest on relatively volatile assets that fluctuate with the change in the market. As an example, if you want to invest in gold, keep yourself updated about the things that may affect the market (value of gold). If an investor turns a blind eye towards the market, it is the same thing as riding a wild horse with your eyes close (you are putting yourself on a great risk). 
Finally, you have the big picture of what is achieve financial freedom and how to achieve it. Now all that is left is to start investing and work your way to become a good investor!