PUT YOUR MONEY NOW, OR ELSE YOU’LL REGRET EVERYTHING!

Happy Investing, Happy Voting!

Why voting? 2018 and 2019 will be our country’s election year. Get prepared, Indonesia! Hope we can take the advantage of this.

We got two big issues to discuss today; The Fed rate and Election year (Indonesia). From these issues, we’ll give you some consideration to invest your money and rate of return comparison of several investment instruments so that you can “place” your money better.

Before we talk about the issues, let’s compare which haven has the better “treatment” for your money.

INSTRUMENTS

Foreign Exchange (Forex)

It was 2008 when one USD was equal to 8,900 Rupiah (IDR), we converted IDR to USD regularly and let it “sleep”. Yes, we bought USD every month and we did it till one USD/IDR hit 9,500. Just let it sleep, guys.

That’s right! You can see that today, one USD is equal to 13,700-13,800 IDR, what a gain! Especially if you have 100,000 USD right now. So, let’s just say that we had one USD for 9,000 IDR, and now we have one USD for 13,700 IDR. That means we have 52% profit margin.

Before you convert IDR to USD, please consider the sharia law. We can't buy money for money unless you need it for export-import activity. Be very careful.

Gold

We started to buy gold around 5 years ago. Yes, it was 2013, a moment when gold experienced its biggest drop; from more than 600,000 IDR/ gram to 480,000 IDR / gram (1204.5 troy ounce).

It’s not just a decline, more than that, it’s an advantage instead. Yes, that was the right time to buy gold; Gold had never been this cheap before. We bought gold for the first time in 2013 when it cost 490,000 IDR/ gram. We bought it regularly; once in three months or once in a semester. It depended on the budget. Just like forex, of course we let it sleep.

As you can see the gold costs 625,000 - 650,000 IDR/ gram nowadays (it even hit 1,350 USD/ ounce several week ago). Let’s assume that we have 135,000 IDR profit in every single gram of gold (625,000 – 490,000), that means we have 27.55% profit margin.

Business

Such a great experience collaborating with my friends to establish a business. Cellular business exactly. It’s not a coincidence I met great partner to run a business. We knew each other well before we founded it (I actually joined them when the business had established).

The three of us put 900,000 IDR capital into business. It turned out very lucrative. Joining them in 2015, we got break event point in less than two years (I could say that I got capital gain in one year only).

Unlike two kinds of investment above, in business, you can’t let it sleep. You need to make it bigger, expand it, and manage it well of course. And today we have the fourth member to run the online business division.

Property

Putting your money in property is fantastic. It grows more than 16% just in one month. We started to buy a plot of land in February. Our smile has never been this big as we learn that the price already moved up at the beginning of March.  

Find the best payment to own a property from now, because it tends to get more expensive as the time goes by.

Stock

By the end of 2015, The Jakarta Composite Index touched above 4,500 IDR. By the end of 2017, it made a record for itself; hit 6,000 IDR for the first time. Indonesia Composite was closed at 6,304.95 at the closing of last weekend. That means we can achieve more than 30% capital gain. What a gain! 

ISSUES

Raising The Fed Rate

We still remember when The Fed raised rate by the end of 2015 for the first time in a decade, the price of gold was quite affected but then the gold kept raising until today.

Another story, it seemed that USD kept moving up against IDR. It was only 9,000 IDR for one USD in 2008 and today USD/IDR likely to drop to 14,000.

In spite of The Fed’s raise, since it is not the first time they raise rate, we believe that gold won’t sink further. There will be a correction but won’t be big. Just keep in your mind that “history repeats itself”, gold keeps moving up despite facing the raising rate several times.

On the contrary, we predict that IDR will drop deeper. IDR never gets better against USD recently. As Powell succeeded Yellen, the issue got stronger and they planned to raise rate four times this year. We can’t deny that when this happen, foreign investors will bring back the fund to the USA. It is common thing that investors expect higher return when The Fed rate gets higher as well. That’s why IDR will surely fall.

Election Year

Election campaign is inevitable. The campaign uses any means of communication. That means today is the right time to buy stock of telecommunications service. When the election reaches its climax, normally the market reacts. Or you can relate the price movement with candidates’ promises so you can choose which stock is the best to buy.

The price of property usually raises as the countdown to election begins. Who knows that the elected candidate think about a mass infrastructure development in the future. Who knows that the elected one plans to issue a policy to boost up a business’ prospect.

STRATEGY

Some investments have certain treatment. You can make gold, stock, bond, or even forex fall asleep after buying them. You can “wake them up” when you need it or when the time seems to be pretty good to sell. In business you need to always upgrade it, expand it, and manage it well. Any important issue should be watched because there is an affection for sure.

Different instrument, different issue! Some will gain a maximum profit when crisis engulf us, others will gain a profit as well as the economic outlook has a bright future.

You don’t need to be rich to invest, you need to invest to be rich! The key of investing is budgeting. Don’t spend your money, at least save it every month and start to invest. When you can save regularly, you can invest regularly then. Buy any kind of asset once in every three month and it’s much better if you can buy once a month.

Stay rational, not emotional. For beginner, you can follow the mainstream of investors’ habit. Hold your Gold and IDR until they announce the raise. Start investing now regarding the election. Remember, prediction can be wrong and therefore prepare yourself well!

Happy saving, happy investing, happy electing!

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WHAT'S YOUR MOTIVATION, INVESTOR?

Some invest their money to gain a certain return and other put their money just to hedge as a protection against rising inflation or some uncertainty. Or maybe they just gamble? Who knows....

Everybody knows that there are certain risks in every assets, instruments, or business operations. By knowing your motivation of investing, you should be able to reduce the risks. You'll have the best choice of assets to invest that fit you as well. In this post, we'll give you three possibilities of investor's nature according to its potential risk. We'll also provide you a chart to make it clearer.

1. HEDGER

To hedge is a way of protecting, controlling or limiting something (Cambridge Advanced Learner's Dictionary).

Clearly, a hedger (Can I call an investor who is hedging "Hedger"?) has a good sense of investing. Some say that people hedge to avoid the loss of the value of their money, they avoid the potency of rising inflation. Yes, we can describe that hedger will always try to reduce the risk carefully at certain rate of return.

Hedgers always figure out what result they expect. Let's just say that a hedger use long term trend to make a financial decision, whether to buy or to sell. A fundamental analysis is the main tool to analyze the price movement. Hedger analyze Economic policies such as rate, inflation, the number of unemployment, geopolitics condition, etc.

Hedger tends to like a fixed return and sometimes capital gain is considered as a hedger's main target. Gold, Fixed rate Bond, or even land or property are good instrument investment for hedgers. Some also invest in stock. To put  money into a deposit account for a certain term is also considerably an act to hedge. 

Since hedgers are best known for their good planning, they'll consider how much interest they will earn and for how long they'll keep the asset. 

2. SPECULATOR

A speculator is a person who buys goods, property, money, etc. in the hope of selling them at a profit (Cambridge Advanced Learner's Dictionary).

Short term trend are often used to make a decision. This short term meaning is quite relative but it surely has a narrower time frame than long term does. As an example, when Non Farm Payroll (NFP) result is announced on every first Friday of month, speculator will be ready to set a position in order to gain profit as much as possible.

Foreign Exchange (forex), stock, float rate bond, or other short term debt instruments offer the best choice for speculator.

3. GAMBLER

someone who often  bets (= risks money on the result) money, for example in a game or on a horse race (Cambridge Advanced Learner's Dictionary). There is no certain trend for a gambler to analyse. There is no certain news for a gambler to read. 

To be honest, gambler never count the risk and occasionally blinded by the profit expectation. By the time the trend moves up, gambler sets long position. Forex, derivative instruments such as option, futures, swap agreement fit most of gambler's nature.

I'd like to draw a chart describing three types of investor above. This chart is based on a risk in each types. With a good planning, hedger has the least risk but often has the least return though. On the contrary, Gambler has the highest return (if lucky) and the highest risk of course, the possibility will likely lead to a loss more than a profit.

We hope you can understand what your motive is before investing to know the risk you'll face. Having a plan to buy a car, house, do some business,or even plan how you receive your pension, need a right investment decision.

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THE FED VS GOLD: "25 BASIS POINTS RAISE FOR 2% DROP"

Hot news!

As The Fed raised 25 basis points of interest rate, gold dropped immediately. As a conclusion of Federal Reserve's Open Market Committee on Wednesday (June 14th), the interest rate raised reaching 1.25%.

We all know, when interest rate goes up, people expect more gain from their investment in stock, bond, etc. This means the government has a confidence in the economy. 

Meanwhile, the gold market reacted negatively. It was common that US Dollar and Gold had a negative correlation. When The Fed raised on June 14th, gold's price moved down. Yesterday it hit the lowest point in USD 1242/ troy ounce and today, it touches 1245.2. It drops more than 2% from its highest position about a week ago (USD 1280/ troy ounce).

Since it's a fundamental policy, this price will likely stay longer, at least until the end of June. What you need to know is, it's true that gold drops, but not for that long. It happened before, gold got low when The Fed raised but soon moved up (remember the end of 2015?).

So, why don't you buy gold now?

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