Did you know that investments can be made in less than 1 year? This investment is referred to as a short-term investment, which is suitable for those of you who are just entering the investment world.
Tips for Starting a Short Term Investment
Even though short-term investments are only made for less than 1 year, you should pay attention to the 3 tips below to become a smart investor.
1. Define Investment Goals
First and foremost, you must determine the purpose of investing in advance, because this relates to the investment instrument you choose.
2. Know the Risk Profile
The risk profile is an aspect that should not be left behind, because the risk profile can describe a person’s level of tolerance for a risk in an investment. One’s understanding of investment can also be a determining factor in the risk profile.
3. Choose investment instruments that suit your needs
Choosing an instrument should not be arbitrary. In order to choose the right one, you have to study the ins and outs, such as the mechanics, advantages, disadvantages. After studying it, you will know which investment instruments are suitable and according to your needs.
4 Types of Short Term Investments
1. Money Market Mutual Funds
This one instrument is often in demand by many novice investors, because investors only prepare capital and later the Investment Manager (MI) will allocate the funds to several securities.
Mutual funds themselves can be long-term or short-term investment instruments. One type of mutual fund that is suitable for short-term investments is money market mutual funds. Where the investment is allocated 100% in money market instruments, such as Bank Indonesia Certificates (SBI) and bonds (with maturities of less than 1 year).
This type of mutual fund has minimal risk when compared to other types of mutual funds and is suitable for those of you who want an investment with a relatively short period of time.
This one instrument is no stranger to the ears of the public. Besides being suitable for short-term investments, many people already know about security and how it works.
Customers will be given the option of deposit retention periods, starting from 1, 3, 6, 12, up to 24 months. For how it works, customers can only withdraw it at maturity and if you intend to withdraw it before maturity, you will be charged a fee.
The profit earned from deposit interest depends on the selected time period. But basically, the interest earned on deposits is greater than savings.
3. Peer to Peer (P2P) lending
P2P lending is a type of investment that has recently become popular. P2P lending is a form of financial technology (fintech) that provides services in bringing together lenders (lenders) with borrowers (loan recipients) online.
Quoted from Amartha, in general investors or lenders in P2P lending will earn interest of 15 to 20 percent per year. Where the interest is charged to the borrower.
Bonds are short-term investment instruments issued by the government. The maturities of bonds also vary, from 1 to 3 years. The way it works is, the bond issuer will provide coupons, or interest that must be paid to investors periodically.
Bonds are instruments with a low level of risk because their security is guaranteed by the government.
So, if you want to provide protection for your family that is linked to investment, you can choose Prudential Indonesia’s insurance product, which is linked to investment.
Most importantly, don’t forget to study and consult with trusted parties before starting, okay! If you are more suitable for investing for more than 1 year, you can also check the following article to find out the types and long-term investment strategies!