Want to invest, but are afraid of the risks? You can try money market mutual funds as a good option. In addition to being more profitable, the risk is almost as small as you invest in savings deposits or gold.
However, before you start investing in money market mutual funds, you first need to pay attention to the advantages and disadvantages that you will feel. In fact, until now the majority of Indonesians still choose deposits as an instrument to double safe money. Indeed, in this case the deposit is guaranteed security because it is supervised by the government directly. But is this decision right? As it turns out, money market mutual funds are superior to deposits. Here are the reasons that can be considered.
1. Give Greater Profits
Money market mutual funds provide greater profits because your funds are placed in money market instruments. The money market is the scene of financial transactions, where the financial instruments transacted are liquid, and are generally short-term or under a year old. You do not need to be confused how to put money there, because there will be an investment manager who is tasked with collecting some funds from various investors, including you, then placing it in the money market instrument.
Investments purchased by investment managers in money market mutual funds, including term deposits, certificates of deposit (negotiable certificates of deposit), money market securities, debt recognition letters, Bank Indonesia Certificates (SBI), commercial securities (commercial papers) that have been ranked by securities rating companies, bonds that mature less than one year, and other money market instruments.
2. Managed with Professionals
You also don't have to worry because the investment manager is a professional. To become an investment manager they must pass various stages of requirements set by the OJK (Financial Services Authority). Mutual funds also have to pass many requirements in order to start operating.
3. Lower Capital
As already explained above that deposits require large capital if you want to get more profit. If you want to start investing capital into deposits, then you must prepare at least Rp5 million because usually below that nominal, the bank will not accept it. To see the results that are good you have to invest at least Rp50 million.
Unlike deposits, money market mutual funds provide leeway. You can start the divestment starting from Rp100 thousand only. The profit is no different between you investing Rp100 thousand or Rp10 million.
4. Easier and Flexible Access
Money market mutual funds provide easy service and access with the existence of online mutual funds. You can keep an eye on the investments you have anytime and anywhere. Not only through a personal computer, now you can access it with an app that can be downloaded from your smartphone.
In addition, if you want to disburse mutual funds, you need to pay a fine, aka free. Unlike the deposit, which will give a 2% penalty for each disbursement and will be a greater fine if you cash out before its maturity. Mutual funds are not tied to that. You will not be charged if you want to disburse funds at any time, either a year or just one day. So if there is a sudden need, you can immediately take it. Thus, the time of mutual fund divestment can be said to be more flexible than deposits.
Money Market Mutual Fund Risk
In addition, the risk of investing in money market mutual funds turned out to be almost as small as deposit savings, it's just that the profits obtained can be greater. The safety factor is also guaranteed, as well as deposits. For example, in the end of March 2015 data, the commonwealth bank's money market mutual fund performance provided a mutual fund return of 6.33-7.35% per year. Unlike deposits whose profits depend on the amount of funds and the length of time the funds are invested. For a minimum investment of Rp50 million, every 1 year the interest reaches 4.75-5.75% per year. It hasn't been deducted with interest taxes either. Once cut, it will be 3.8-4.6% per year. From the data, you can assess for yourself which investments provide more benefits.
Many people are still hesitant to invest in mutual fund instruments because they are worried about the risks that exist. When compared to saving or depositing, the risks borne are equally minimal. Nevertheless, the benefits you get are greater and more flexible. This is related to the period of time and the amount of funds invested. If you want to try investing with that risk, the best option falls on money market mutual fund investments. In the majority, money market mutual funds invested in risk banking deposits become small. By investing in money market mutual funds, it is the same as you keep funds in bank deposits. Therefore, the feared risks such as the initial capital of the investment can disappear, becoming relatively very small. This is because most mutual fund investment funds are also placed in deposits.
However, there are also those who distinguish money market mutual funds and deposits. The difference is in the mechanism of profit or return. You will only earn interest income periodically once a month if you place funds in banking deposits. However, in mutual funds, the return is obtained from the increase in NAB (Net Asset Value). NAB is the term price in mutual funds. This system is the same as you buy gold. The profit you can immediately get by selling it at the market price at that time. For example, money market mutual funds managed by PT Trimegah Asset Management, namely TRIM Cash Mutual Fund 2. If you buy this mutual fund product on January 12, 2015 worth Rp1,000,000.00, you will get a mutual fund participation unit of 883.46 units, because at that time NAB per unit is Rp1,131.91.
On a special occasion, you decide to sell the entire TRIM Cash 2 Mutual Fund unit you own on April 13, 2015. As a result, you will get Rp1,019,318.00 because NAB per unit trim cash 2 at that time is Rp1,153.78 multiplied by the 883.46 units you have. That is, within three months, you have earned a return of 1.93%. If calculated in one year, the figure can be about 7.72%. You need to note that mutual fund returns are not taxed. This is different from the deposit interest income that is taxed by 20%. The return of the mutual fund is not reduced in the slightest cost.
Meanwhile, until now deposits are still the choice of many people to save funds. They hope that they will benefit from the interest rates that banks offer. Nevertheless, do they benefit from these interest rates and does the value of money they have grown? For example, Bank BCA provides deposit interest of 6.5% per year. Meanwhile, BANK CIMB offers a deposit interest rate of 7.5%. This figure is not much different from the return of money market mutual funds TRIM Cash 2 which is 7.72%, like the first example. However, you need to note that the bank's interest has not been deducted deposit interest tax by 2%. That is, on a net basis, BCA and CIMB deposit customers only get real interest income of 5.2% and 6% respectively.
In addition, the minimum investment funds that must be met on deposits are quite large. For example, at BCA, the minimum funds that can be placed are Rp8 million. In fact, with a capital of Rp100 thousand only you can already buy money market mutual funds. Then, the period of investment in money market mutual funds is not limited, just like saving funds in savings. However, the benefits are more likely than deposits. While in deposit products, there is a minimum period of investment required. That means that in that period you can't disburse funds. If you do, you will be penalized.
So what exactly causes money market mutual funds to generate higher returns? The majority of its investment portfolios are also in deposits. That's because of the different bargaining positions. If you deposit funds amounting to Rp10 million, the bank will only provide normal interest rates. However, if you manage money market mutual funds, your funds will be placed in the amount of tens or tens of billions of rupiah. Therefore, banks offer much higher interest rates.
Keep risk in account
Keep in mind that money market mutual funds are not completely free from risk. Because the investment is partly placed in commercial securities (commercial paper) and bonds with maturities of less than a year, then the risk can arise because it is triggered by the issuance of these securities. But you do not need to worry because mutual funds limit their investments to no more than 10% on each instrument. To find out, you can look at prospectuses and fund fact-sheets. By paying attention to the number of instruments available, you can determine which ones are more risky.
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