Financialtreat – will explain about Know, Understanding investing of Advantages and Disadvantages which you will get in the following article. let’s look at this article carefully!
One of the important things in managing finances is to set aside income for investment. What is an allied investment? Investment is the activity of investing or funds with the hope of getting a profit or return in the future. Investment is the activity of placing funds or other valuable assets on an exclusive instrument within an exclusive period of time.
So that from the placement of these funds, it is expected to generate returns. According to the big dictionary of Indonesian (KBBI), allied investment is the investment of money or capital in a company or project for the purpose of making a profit. People who make investments are called investors or investments.
Know, Understanding Investing of Advantages and Disadvantages
The definition of investment is investment, usually in the long term for the procurement of complete assets or the purchase of shares and other securities to make a profit. Meanwhile, citing the Investopedia page, investment is buying assets or goods with the aim of generating income or increasing the value of these assets.
When an individual buys goods as an investment, the goal is not to consume the goods, but rather to use them in the future. An investment is always about spending a certain amount of capital today starting from time, energy, money, or assets with the hope of greater returns in the future. So in simple terms, the definition of investment is to develop money or other assets in order to add profits in the future to achieve exclusive goals.
The exclusive goals in question such as the desire to connect business, get married, send children to school, build a place to live, pension needs and so on. The purpose of investing is not to make an investor get rich quickly. Because investing must be accompanied by patience and also a strong commitment and also remain calm when the market fluctuates.
Types of Investments Based on Time
Based on the timeframe, there are two investment models, namely short-term investment and long-term investment. However, the definition of investment is more often interpreted as long-term investment. Short-term investment Short-term investment is a type of investment that is carried out in a very short period of time.
Usually, the profit from short-term investments is expected to be realized at least within a period of one to three years. Because the timeframe is short, the return on short-term investment is definitely also smaller. Examples of short-term investments are short-term bonds, the stock market, certificates of deposit.
Long-term investment While long-term investment is an investment that takes more than three years to make a profit. Usually, new investors can enjoy the return on their investment at least in the next five years to decades.
The return on long-term investment will definitely be greater than that of short-term investment. Examples of long-term investments are land purchases, stock investments, mutual funds and gold investments.
Miscellaneous or types of investments
Many types of investments can be an option. Starting from investment types with low risk to investments with high risk. Here are the investment styles:
1. Stocks
Shares are the capital participation of a person or party (business entity) in a company or limited liability company. By including capital, the party has a claim on the company’s income, a claim on the company’s assets, and is entitled to be present in the General Register of Shareholders (GMS).
2. Bonds (Bonds)
The Bonds are one of the influences listed on the exchange. Bonds are usually issued by corporations as well as the State. Bonds can be grouped as debt-based impacts in addition to sukuk.
3. Mutual funds
Mutual funds are a type of investment that is suitable for novice investors. In simple terms, mutual funds are platforms used to raise funds from the investor community to be eventually invested in an influence portfolio by investment managers (Mi).
4. Gold
The Gold is a very popular style of real or physical investment. Gold is one of the interesting choices because it has a fairly low risk. Gold has a stable value and always rises every year.
5. Deposits
Deposits are deposits whose disbursements can only be worked on exclusive terms and exclusive terms. If someone keeps money in an exclusive amount and time in the bank, they will get interest in return.
6. Investment Property
property is one of the physical investment styles. This investment has a concrete physical object. Property investment is very profitable because the price is constantly increasing every year. There are many ways to invest in property, the simplest of which is to buy land and then build property on it. The property is then sold or leased for profit. Not only that, other examples of investment models are foreign exchange (Forex), sukuk (Islamic bonds), cryptocurrencies (cryptocurrencies) and others.
Investment objectives and benefits
1. Financial freedom
One of the goals of investment is financial freedom, where a person is recognized that someone can get passive income to meet the needs of life in the long term.
2. Protecting assets from inflation
The next goal of investment is to protect assets from inflation. Inflation that occurs continuously every year can make the value of assets decrease. With investment, assets also develop to generate added value in order to offset the scourge of inflation.
3. Increase wealth
In fact, the benefits and purpose of investment is to increase the number of assets or wealth owned. For someone who works, the return on investment is certainly an additional income.
4. Emergency needs
Many people choose investment is because it is a conducive road when experiencing an emergency situation. This is because in the coming era, sometimes there are costs that must be incurred in large amounts, when the monthly income is felt that it will not meet.
Some emergencies include investment such as the cost of renovating or buying a place to live, education costs, the cost of taking the Hajj, to the cost of living sick if sick in the future. That’s the news around what an investment is, its model, its purpose and benefits. It can be said that investment is the busyness of investing or buying assets with the aim of obtaining profits in the future era.
Advantages and Disadvantages of Investing.
Advantages of Investing
Physically Visible Investment
You as an investor will have investments that can be seen physically, for example, building houses, buildings, apartments and others.
Earning More Income
Not only will you own a property you can get income from that property. By renting out the property you own, you will make money.
Low Risk
In fact, the average property price increase is 10-20Percent per year. Even if it decreases, the convoy will rise again quickly. Convoys of property values that are not as sensitive as stocks provide additional low risk so that they rarely cause losses
Stable Market
Based on the results of the Residential Property Price Survey (SHPR) of Bank Indonesia, it is indicated that residential property prices grew higher in the second quarter. The development of the Residential Property Price Index (Ihpr) in the second quarter was recorded at 1.49Percent, higher than the development in the previous quarter.
By 1.35Persen. This shows that the property market is increasing much more stably than other investment markets. So that property is a promising investment for investors.
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Disadvantages of Property Investment
Hard to Sell Fast
The first disadvantage is that the property you own tends to take a long time to trade. Unlike the stocks that you can sell quickly.
Requires Large Capital
Property also has a very high price, you as an investor must have a large enough capital to run an investment.
Expensive Maintenance Costs
After owning the property, it is impossible for you to just buy and leave it alone. You certainly need to carry out regular maintenance for the property you own and it will cost you a lot of money. But, that’s the risk if you choose to invest in property.
Those are some of the privileges and drawbacks that you will get when deciding to invest in property. Therefore, before you decide to invest in property, you must make sure you have all the readiness to start investing.
Those are some reviews that discuss allied investments by investing you will be easier in managing finances and setting aside income and thank you.