financialtreat – will explain the Benefits of Capital Markets for Investors and the Economy that you will get in the following article. Let’s look at this article carefully!
Having a secure future is certainly everyone’s wish. There are many ways that can be done to achieve it, one of which is to invest early. Investing early on, especially at a young age, is one of the efforts you can make to guarantee a better future.
Benefits of Capital Markets for Investors and the Economy
When deciding to invest, there are various types of investments that you can choose from. Starting from real investments in physical form such as land, houses, and gold as well as non-real investments in the financial sector.
An example of non-real investment is assets in the financial sector such as in the capital market. The benefits of capital markets in investing are beyond doubt. Some instruments that include investments in the capital market include stocks and mutual funds.
Investing in the capital market can be done by anyone and at any time. Especially now that there are many conveniences that help your process in investing in the capital market. In addition, it turns out that the benefits of the capital market not only have an impact on investors but also on the country’s economy. Interested in investing and getting capital market benefits? Here’s the review.
What is a capital market?
Before investing in the capital market, it’s a good idea to know first what the capital market is. The market here does not mean the physical location like the market in general but the activity of transacting between sellers and buyers of capital market instruments such as stocks and mutual funds.
Capital Market Law No.8 of 1995 on capital markets defines capital markets as “Activities concerned with public offering and securities trading, public companies relating to the securities they issue, as well as institutions and professions related to securities.”
In Indonesia itself, the capital market is managed by the Indonesia Stock Exchange (IDX). As mentioned earlier, the benefits of the capital market are felt by the state, investors, and issuers (companies). There are at least two functions of capital markets for the country’s economy:
- As a means of business funding or as a means for companies to get funds from the financier community or investors.
- A means for people to invest in financial instruments such as stocks, bonds, mutual funds, and other capital market instruments.
- Benefits of capital markets for the country
- In addition to the two main functions that have been conveyed before, there are several other capital market benefits felt by the state in this case the government to help its economy.
One of the sources of state revenue
The benefits of the capital market for the first country areas are one of the sources of state revenue. State revenue obtained from the capital market is in the form of taxes. Any tax imposed in transactions in the capital market can enter the state treasury and be recorded as a deposition.
Helping to run the wheels of the economy
The benefit of capital markets for the next government is to help run the wheels of government. What does that mean? With the growth of investors who buy shares of companies listed in the capital market, the company has the income to expand its business more widely.
The growing size of the companies inside is directly proportional to the economic progress of the country. In addition, if the company is getting bigger in business and the more number, the more labor needed is also increasing which means opening jobs for the community.
Attracting foreign investors into the country
The next, benefit of the capital market for the country is that it can attract foreign investors to invest in the country. If the capital market is managed properly, then foreign investors will be interested in investing in Indonesia. What are the benefits? With foreign investors, the company can grow the business to be even wider. As mentioned earlier, companies that are growing larger go hand in hand with the economic progress of a country.
Benefits of capital markets for investors and the public
Investors in this case are financiers who want to invest their funds by buying capital market instruments. Who belongs to the financier? Anyone, even ordinary people can become an investor in the capital market. There are many benefits of capital markets felt by the community, including:
The first benefit of the capital market for investors is to make a profit. The goal of investing is to make a profit. One of the benefits obtained is dividends from investments in the capital market in the form of stocks. If the shares we invest in value continue to increase in the capital market, it will be a very large profit.
Add investment alternatives
The benefit of capital markets for the next community is to add investment alternatives. If what is done in the field of property such as land or houses in general requires large capital, now people can also invest in the capital market without large capital. For example, in mutual fund investments, potential investors can invest only with initial capital below Rp 500 thousand. Likewise with investment in the stock sector.
Capital market instruments
After knowing the benefits of the capital market for both the country and the government, it is time to invest! There are four capital market instruments traded in Indonesia, namely stocks, mutual funds, bonds, and derivatives. All four can be selected according to your needs in investing.
Stocks are the most popular capital market instruments. Capital market benefits in the form of dividends are also obtained from investing in stocks. Simply put, a stock is a letter of proof of ownership of a person in a company. In other words, if you buy shares of a company that is traded on the capital market then you are buying ownership rights to that company.
Because you are one of the owners, you are entitled to dividends or profits earned by the company and then distributed to the shareholders. The larger the shares of the company you have the greater the dividends you get.
In addition to stocks, another popular instrument is mutual funds. Unlike stocks, in mutual funds, your funds are entrust to investment managers to invest in the capital market. Of course, the investment manager you choose must have been officially register with the Financial Services Authority (OJK) so that it is guarantee trust.
Mutual funds themselves are divid into several types, namely Money Market Mutual Funds, Fix Income Mutual Funds (RDPT), Protect Mutual Funds, Mix Mutual Funds, Index Mutual Funds (RDI), and Stock Mutual Funds.
Bonds are debt securities. Simply put, a bond is a statement of the debt of the bond issuer to the bondholder. The benefits obtain from bond investments are coupons that are divide between fix and floating coupons.
Derivatives are derivative securities of a stock or bond. Compare to the previous three capital market instruments, Derivatives are among the less popular in the community.
Investing for Beginners
Compare to other investments, money market mutual fund investments have many advantages for novice investors. The reasons vary, ranging from low initial capital, attractive profits, and of course high liquidity. Unfortunately, you can’t get a variety of excess mutual fund investments if you don’t know the state of the money market.
That is why the role of a Financial Manager or in the realm of investment call an Investment Manager (MI) becomes important. In order not to be confuse, let’s discuss what are the roles of MI in mutual fund investments below.
Allocating investor funds
When you decide to invest, that’s when you should get in touch with the Investment Manager. You can discuss what mutual fund investment instruments are good for novice investors like you. You can also ask the Investment Manager about the type of mutual fund investment that suits you. After deciding on the type of mutual fund investment, the task of the Next Investment Manager is to allocate investor funds.
Decide when to buy and sell investment instruments
As an investor, you must understand the state of the market. However, if you have not mastere it, the role of the Investment Manager here becomes even more crucial. As experts, of course, they already have analytical data that is use to determine when to buy and sell investment instruments.
Not only buying, investment managers also need to consider the right time to sell your investment instruments. The role of an Investment Manager is to decide which stocks or bonds are not working well and should be sold. It could also be the other way around, they can decide which instrument is better to sell according to the market conditions at that time.
Read more about Financial management:
Managing mutual fund assets and investments
One of the main tasks of the Investment Manager is to manage the assets and wealth of mutual funds as well as possible for the benefit of investors and mutual funds. A mutual fund can grow well if it is manage by a party who has the expertise and dedicates all his time to it. This is the most crucial role of an Investment Manager in a mutual fund.
Interest in investing in the capital market? Now you can do it easily. If you are still confuse to determine the instrument to start investing in the capital market, it doesn’t hurt to invest in mutual funds and feel the many benefits of the capital market.
Investing in mutual funds means you entrust an investment manager to manage your funds into a wide variety of securities portfolios.