financialtreat – will explain about Understand About Investment Management and How to Invest which you will get in the following article. let’s look at this article carefully!
Investment management is a process carried out to build investment portfolios, such as stocks, bonds, and other instruments in accordance with the desired goals. Investment management can also be referred to as a financial service that provides consultation in the form of investment strategies to someone. Investment management is arguably a professional management that manages investments or securities, such as stocks, bonds or other assets with the aim of making a profit.
Let’s Understand About Investment Management and How to Invest Good and Right
The parties who make investments are usually called investors. Investors themselves are classified into two, namely individual investors and institutional investors, which are usually companies or institutions. Theoretically, here are the reasons why someone makes an investment:
- Get a better life in the future.
- Improve their standard of living from time to time.
- Reduce the impact of inflation so as to avoid the risk of a decline in the value of wealth.
- Make tax savings.
- In investment there is a risk and return that has a unidirectional and linear relationship. In other words, the greater the risk, the greater the return and vice versa.
- This makes investors intentionally post their funds in several places to avoid too big a risk. In investment management, there is also an investment decision process which consists of five stages, namely:
- Determination of investment objectives
- Determination of investment policy
- Portfolio strategy selection
- Asset selection and portfolio formation
- Portfolio performance measurement and evaluation
How investment management works
If you decide to use an investment management service, the provider company will provide an explanation of the steps you must take. Investment management requires you to create an investment account according to the company or broker used. The provider will help you transfer money to your investment account
Later, the investment manager will make investment decisions according to the savings goals, time, and risks taken
The investment manager will also discuss related to the risks that you will face, for example when conditions are up and down
Functions and benefits of investment management
Investment management has functions and benefits, including:
- Investment management function
- Provide investment activities of business entities.
- Determine the strategy for investing.
- Develop investment policies.
- Plan a business or project.
- Reduce the risk of losing assets and increase profits.
- Checking finances for business.
- To optimize the investment portfolio.
- Predict the evaluation of investment attractiveness.
- Investment management benefits
- Maintain asset value.
- Avoid buying too much.
- Monitoring asset depreciation.
- Makes budgeting easier.
- Knowing the risks that will occur.
- Securing assets.
When should you use investment management?
So that your money is optimal, here are signs that you need investment management to manage your finances. You feel insecure to manage investments and make decisions and still have doubts. It is feared that these things could cause losses.
Want to hear the opinion of the experts directly so that you are more confident. Want an expert who oversees your portfolio and can secure assets from one portfolio to another. Have financial problems and are confused about allocating them. Need expert help to help manage other finances.
Laws governing Investment Management
The Indonesian government itself regulates investment matters through Law Number 25 of 2007 concerning Investment. With the rules of Law Number 25 of 2007, investment or investment activities are carried out on several principles, namely:
- Legal certainty
- Fair treatment that can’t be seen due to country differences
- There is a balance with the unity of the Indonesian economy
- That means you don’t have to worry about investing because everything is arranged and your investment is protected by the government.
The role of investment managers in investment management
Investment managers generally play a role in the formation of mutual funds. In other words, mutual funds which include money market, fixed income, stocks, and mixed are portfolios formed by investment managers. Specifically, this is what investment managers do.
1. Manage customer assets
After the investment manager receives the investment funds, he will then allocate the funds according to the selected mutual funds.
2. Decide which investment instrument to buy
The investment manager will determine which instruments to buy. Because investment products are san there’s a lot in the capital market. The task of the investment manager here is to choose which shares to buy in accordance with the profits and track record in the capital market. We just need to monitor it, whether the investment is profitable or not. If the investment manager we choose is smart, our portfolio will still be green even though the capital market conditions are sluggish.
3. Decide when the instrument is sold
The investment manager will also determine when is the right time to sell or buy shares that are considered less than optimal.
4. Reporting the condition of customer assets
Not only optimally managing funds, investment managers also have the task of providing daily reports on where your investments have been placed. You can easily monitor reports from investment managers through the investment management application you choose.
Tips for choosing an investment manager
So far, are you interested in using an investment manager? Before choosing it, it’s a good idea to look at the following tips for choosing an investment manager.
1. Supervise by OJK
Choose an investment manager who is legal and has been registere with the Financial Services Authority (OJK). How to check an investment manager registere with OJK starts from:
- Open .
- Select Profile.
- Select Investment Manager.
2. View track records
Also trace the track record, has the investment manager been profitable so far? Is the investment manager trustworthy or not? Also find out about negative issues such as fraud or illegal activities carrie out.
3. See the performance
To see the investment manager’s performance, you can check the mutual fund prospectus section and you will see a graph of investment management. You can judge for yourself whether the graph is moving reasonably or suspiciously.
Good Ways to Invest
It is not difficult to invest, considering that in today’s digital era, information about investment instruments or market research is very easy to obtain. However, investment certainly cannot be done haphazardly. Here is a good way to invest, in order to realize our financial goals.
1. Make Sure We Are Financially Healthy
Before investing, make sure you have an ideal emergency fund and have financial protection by having health insurance or insurance. Financial planning for the future is very important. But never underestimate the things that are a concern and priority at this time.
Without an ideal emergency fund, we will have difficulty in dealing with the risk of loss of income due to layoffs or economic uncertainty. Without health protection, we can also lose substantial funds when we have to seek treatment.
2. Set Goals First
Know the financial goals you want to achieve in various periods. Call it for the short term, medium term, and long term. Without clear goals, the investment process will be immeasurable. After determining the goals, also determine the funding needs to realize them. We can start the investment process after understanding the need for funds.
3. Know the Risk Profile
Each investment instrument has different investment characteristics, and each investor also has a different risk profile. The risk profile depends on a person’s ability and willingness to tolerate investment risk. Conservative investors tend to avoid instruments with high volatility, and aggressive investors are more willing to take risks because they want high returns.
The risk profile can of course change as one’s understanding of investing begins to improve. Increase understanding of investing will increase the ability to tolerate risk.
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4. Recognize Systematic and Non-Systematic Risks of Investment
If the risk profile has a benchmark in the form of the investor’s psychological condition, there is also investment risk that investors should not escape. In investment, there are two types of risk, namely systematic and non-systematic.
Systematic is a completely unavoidable and diversifie risk, and strikes into all kinds of instruments. These risks can be in the form of market risk, changes in interest rates, and inflation. Meanwhile, non-systemic risk is state as risk that can still be avoide by diversifying investment instruments. These risks include, among others, business risk, liquidity risk, and risk of lawsuits.
These are the things you should know before investing. Make sure you know investment management and how to invest well so that our financial goals can be achievd. Good luck!