Many people still underestimate financial planning and management. When they start to realize the importance of managing their finances, they already have lost a fair amount of opportunity cost for not starting earlier.
However, with the recent increase of awareness on personal financial management, the millenials are more observant and attentive in their financial planning and management.
Their increased awareness is a result of the ease of access to financial management-related information. Moreover, they who have reached 28 years of age or older are starting to enter a more financially stable period of their lives.
With this financial stability, it is not surprising that they start to think of more productive short-term and long-term financial planning and management – one of them is choosing the right investment. What are the most suitable investments catered to millenials that tend to take risks and be actively involved in their investments?
Below are 5 investments that millenials should try:
- Mutual Funds
Mutual funds are perfect for beginning investors with limited funds and have not yet mastered risk analyses for their own investments. In Indonesia, you can open a mutual funds account with only Rp 100.000. This makes mutual funds an ideal alternative investment for those who have limited funds but would like to diversify their products.
With this type of investment, your funds are going to be a part of a larger group of funds to invest in a certain product by an investment manager. With accounting the market sentiment and risks and determining the best investment strategy to yield the most profits, the Investment Manager will invest the funds in varying investment products or instruments.
However, for millenials who want to be actively involved in every activity of the investment, mutual funds might not be too interesting because they are not the “main player”. Every aspect of this type of investment largely depends on the investment manager’s capability in managing your funds.
Deposit is a financial instrument suitable for all ages. As one of the banks’ savings product, deposits are considered as a low risk investment, but the depositing and withdrawing your funds can only be done on a certain period.
The main advantage from a deposit is the higher interest compared to a normal savings account. Currently the interest offered is approximately at 5%, but that is before a tax cut of 20%.
Deposit is definitely the lowest risk option compared to other products, but the return from deposits are regarded the lowest. Moreover, it is important to consider the amount of inflation to see if the return of the deposit covers the inflation rate.
Perhaps in the beginning of last year, not many know about cryptocurrency. Thanks to the major surge of one of the coins in the end of 2017, crypto is now widely considered and accounted for. This high-risk and challenging investment
Driven by the increase of Bitcoin by 15 fold, other alternative digital coins are included in the hype, including hundreds of new alternative coins offering a grand amount of investment return.
The technology behind cryptocurrencies and its real-life implementations are certainly groundbreaking. However, behind the grandiose offers, there are unbelievably high risks as well.
The losses from the fluctuating currency exchange to the scams that can make us lose all of our investment assets are deemed “usual” in the crypto world. Because of this, in some countries, cryptocurrencies are banned and regarded as having an uncountable risk.
- Foreign Exchange
Foreign exchange trade can be a suitable alternative for millenials. This type of investment is quite challenging and can produce high returns. However, the returns are majorly determined by the amount of funds you are willing to invest and your abilities to analyse the current market condition.
Please note that forex is a high-risk investment. If you are not careful enough, you may lose your investment in a short amount of time. So it is very important for millenials who want to invest in forex to really understand how the trading works and the risks before making the decision to invest.
- Peer to Peer Lending
Peer-to-Peer Lending (P2P Lending) is a new investment scheme in Indonesia. To put it simply, it is an online lending scheme to borrowers with a certain amount of interest return to a lender that can lend starting from a relatively small amount.
There are two types of this online financing: lending to individuals and lending to SMEs. Crowdo, as one of the leading peer-to-peer platforms in Indonesia, focuses itself to lend funds to SMEs in order to increase the economic development of the country.
One of the factors that makes investing in P2P lending interesting is the competitive returns in a relatively stable range over time. In Crowdo, you can start investing for as little as Rp 1mio, and choose the time frame and interest rate according to your appetite and comfort.
With the relatively low starting amount, anyone can be an investor, including millenials who are still students in university. With understanding the risks in investing in P2P lending, millenials now have complete control over their investment assets and can explore how to create their own strategy to fulfil their investment targets.