Ask your money to work
Ask your money to work
JAKARTA (JP): Undoubtedly, there are still people consciously
and continuously seeking out all business opportunities, even in
such an adverse economic situation.
A success story often does not require a born entrepreneur,
but is usually the fruit of grim experience, or at least some
sort of sacrifice.
But we all believe that one cannot make an omelette without
breaking eggs, don't we?
In an interview on Friday with The Jakarta Post, investment
observer Elvyn G. Masassya said there were many opportunities
available despite the tense political situation, violence in
several provinces and the plunge of the rupiah.
The door, he said, is wide open for individuals from all
backgrounds, with large or small amounts of money.
"But before you decide where you want to place your money, you
first have to know your own personal character. Are you a risk-
taker or a risk-avoider?
"From there, you can decide on the proper investment for you
under the current circumstances," Elvyn, a member of the Center
for the Study of Business Communication and Politics, said.
The next step, he said, is to draw up an investment plan,
whether it is a one-year project, for the long term or
speculative.
"Based on this, we can now move forward to discuss the types
of attractive investments given current macroeconomic
developments."
Elvyn personally suggested investing in the financial sector.
"In the corridor of my knowledge, the correct investment
principle nowadays is not how to work to earn money, but how to
let your money earn money."
So, order your money to work for you.
And this, Elvyn said, can only be done at the optimum level in
the financial sector.
"The other sectors require you to have adequate technical
qualifications. If you want to play in the plantations, for
example, you have to know plantations.
"In the financial sector, you can do it based on your personal
character," the columnist said.
According to him, investment in the financial sector can be
divided into four subsectors: the money market, stock exchange,
commodity exchange and conventional banking services.
"In my personal point of view, the money market is the
subsector in which you can gain the quickest benefits, but it
also carries the highest risk."
Which of the four subsectors is the most attractive in 2001?
"Still the money market, since it is directly linked to the
volatility of currency exchange rates," Elvyn said.
He said the money market was not only about the rupiah versus
the US dollar. "One should also play with the other currencies,
such as the euro."
The next investment option for this year is buying stocks and
putting money in savings accounts.
The next question is whether we have to put all our money
in one subsector, or should we invest them equally in the four
subsectors.
"Given the current situation, I would say that a risk-taker
could place 50 percent of his money in the money market, with the
remaining half divided equally in the stock exchange and banks,"
Elvyn suggested.
Why?
A risk-taker, he explained, can achieve optimum gains only by
venturing into volatile areas.
"At this time, holding the U.S. currency is a must. But still,
one has to play with other currencies, too."
In the stock market, Elvyn suggested investors deal with
sectors that, for instance, have been identified by the
government as priorities.
One alternative for a long-term investment, he said, is the
property sector, such as real estate, which is still not popular
with today's investors.
"The other alternative is sectors that have benefited from new
government regulations, such as the alcoholic drinks that are now
taxed as luxury goods," Elvyn said.
Export-oriented firms are sometimes not as promising as they
should be because of the reality that only certain goods receive
a warm welcome in overseas markets.
"Consumer goods is a more promising area," he said.
In the capital market, there are several options, like bonds
and mutual funds. "It is good to consider a mixed composition."
Elvyn suggested investors buy bonds issued by corporations in
US dollars. "They are much attractive than bonds issued in rupiah
by the government and corporations."
Why?
"Because there are many such (rupiah-denominated) bonds
offered on the black market in order to avoid taxes, which has
really discouraged the market," Elvyn said.
In the banking sector, he prefers a blend of savings in the US
dollar and the local currency. "Principally, it is half-and-
half."
US dollar savings are quite attractive at the moment, while
interest rates for rupiah savings should tend to increase
gradually until late this year, he added.
Putting money in fixed deposits requires accurate
calculations, he said. "One thing many people forget is the
duration of the deposits."
"Under the current circumstances, where there is still
pressure on currency exchange rates and fluctuating interest
rates, relatively safe deposits are medium-term ones, that is
three or six months," Elvyn said.
And if you are a risk-avoider, you should opt for the reverse
investment distribution: put half of your money in the bank, 25
percent in the stock market and the remaining 25 percent in the
money market.
What about next year?
First, evaluate your investments every quarter since the
economic cycle moves every three months.
But, as the saying goes, never put all your eggs in one
basket. (bsr)