There are
many financial instruments that can give a substantial
abnormal return Indonesia other than save deposit. One instrument that
made the hype was Futures market, but its reputation is starting to get dim due
to the lack of ethics and mismanagement from the company. From these type of
problems, people have made an assumption that the futures market are a scam and
fraud with a catch phrase "get rich quick". Other investment vehicle
that are big interest among the Indonesian people include precious metal, such
as gold and silver, land, and of course property/real estate such as apartment
and boarding houses or flats. People have no hesitation on gold because it has
a history of its own and it is one of the oldest financial instrument among
others. Investment on land/property and real estate also have its own characteristic
- just like gold, it has a very long and unique history. The Indonesian have
become very comfortable with the two instruments because they are rich in
history, and each of them have their own reputation among investors.
Many
people still believe that investing in gold, land and property, especially in
Jakarta and its surroundings - which believed to always be increasing overtime.
Gold - supposedly the safest investment - is actually not very safe at all,
over 2 years period (2012-2015) the price of gold have decreased by 43.4%
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| The Fall of Gold Price During 2012-2015 |
For the
price of land and property may influenced by many factors, one of them is
location (which in fact is never run out), and the growth projection of the
particular area. However, the risk of having land/property is the same like
other investment vehicle - such as gold and stocks - where "time" is
the main risk in every investment.
Even
though the Indonesian Stock Exchange has been around for 38 years, stock
investing has been alienated by much of the people in Indonesia. Until today,
there are roughly only 434,443 investors actively trade in the exchange,
whereas there are over 250million people in Indonesia, that's only about 0.2%
of the whole population that are actively trading in the Exchange. There are
about 532 companies that are listed in the Indonesian Stock Exchange, and 45 of
them have the highest volume per day. These 45 stocks are compiled into an
index called LQ45 - 45 most liquid stocks in the Indonesia Stock Exchange. Why
do many Indonesian underestimated stock trading, from "risk"
perspective, it is relatively higher than land and property, but investing
stock is much more practical.
Many
people have the assumption that investing in the stock market, you have to
monitor it every single day - trying to guess the movement of the market is
just like trying to figure out the outcome of a coin toss, it's a 50-50 chance.
It's true that investing in the stock market have a risk of its own, however
big investors have also lost much money during a specific economic downturn.
One good example is the great Warren Buffet,
who doesn't know Warren Buffet, even though he's famous for being the most
successful investors in the world, his investment company plummeted 77% during
the 2008/2009 recession which impacted on a global scale, but his name is still
known as the most successful investor in the world.
So, now
you might be asking, "So…what's all the big deal with stocks anyway? Is it
safe to save money in the stock market?". If you'd like to save money, you
should do it in the bank, but if you'd like to invest, the most practical which
have a high potential return is definitely stock. My number one suggestion is
to use your "disposable income",
do not use all your money in the savings account to invest in stock market
because once the market drops, you have a high potential of being bankrupt. My
other suggestion is to create a mid to long term target with the investment
(around 3-6 years) because you will see result after 2 or up to 3 years. One
example is my own portfolio, which I have invested for 3 years in the
Indonesian Stock Market, and the return after 3 years is a whopping 47.95%,
whereas the index is only 12.41% on the same period (data as of 17 of March
2016)
The index
average return for the last 3 years is about 10%, this is pretty good compare
to a bank's save deposit interest, which only average to 5.17%, and overall
average of 6.9%. The index's return is also still pretty high compare to
Indonesian Retail Bond (ORI) which have a coupon of 9% annually.
Everywhere
you invest, there will always be a risk involve, however, you have to know your
risk appetite, if you don't like a high risk investment, you may buy any stocks
that are listed in the LQ45 index - or also known as blue chips stocks. Stocks that are in the LQ45 are relatively
safe because the companies are relatively mature and has a stable income, you
may check the list from this link. If you're a risk taker, you may explore the
exchange a little deeper and try to find the next big thing, such as PT.
Waskita Karya (Ticker: WSKT), the IPO price of the stock was only Rp. 411 per
share on December 2012, and now it is Rp. 1,985 per share, a return of 383% in
just over 4 years, now imagine if you bought it on December 2012 and keep it
there for 4 years.
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| PT. Waskita Karya Price Movement Since its IPO in late 2012 |
In
conclusion, stocks are not poison, their reputation are tarnished because of
people that are impatient and greedy. Investing in stock have its own
challenges - and that is to find the hidden treasure, just like PT. Waskita
Karya. With patients and discipline, I'm sure that you will gain more revenue
from your investment in the stock market.
Cheers,
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