5 Differences Between Securities Companies and Investment Managers That Investors Must Understand

 When investors want to enter the Indonesian capital market, there are two institutions they must be familiar with: Securities Companies and Investment Managers. While both are tasked with helping investors navigate the investment world, they have distinct roles. The differences between these two institutions also significantly impact an investor's investment activities and must be tailored to their needs and objectives.

Unfortunately, the differences between Securities Companies and Investment Managers are often overlooked by investors, especially beginners. Knowing this, as a savvy investor, it's crucial to understand the differences between Securities Companies and Investment Managers.

For a more detailed explanation of the five differences between Securities Companies and Investment Managers, please read the explanation below.

5 Differences Between Securities Companies and Investment Managers That Investors Must Understand

Definition and Types of Services

Based on their definitions, securities companies and investment managers have easily discernible differences. A securities company is defined as a securities intermediary, carrying out the activities of a securities underwriter (PEE), and a securities broker (PPE).

The services provided by a securities company, also known as a broker, include acting as an intermediary between investors and the stock issuing company to facilitate the buying and selling of securities. Securities companies also offer recommendations on stock options that meet the needs of their clients.

An investment manager, meanwhile, is a company responsible for managing funds collected from a group of investors in mutual fund portfolios or specific collectively managed funds. In other words, an investment manager is better known as a company that manages mutual fund products that investors can purchase according to their investment needs and objectives.

Investment managers typically operate under the auspices of a securities company, providing services under a separate legal entity or as a subsidiary. However, some investment managers operate independently.

Required Business Licenses

As institutions with a more comprehensive and extensive service capacity, Securities Companies hold more business licenses than Investment Managers. To become a Securities Company, the required licenses from the Financial Services Authority (OJK) cover Securities Brokerage (PPE), Securities Underwriter (Underwriter), and Investment Manager. These licenses are mandatory for Securities Companies to conduct their respective business activities.

For Investment Managers, however, the only business license required is for Investment Managers, with the primary focus being the management of mutual fund portfolios or collectively managed funds from a group of investors.

Scope of Activities

Depending on their business licenses, securities companies can operate in three main business areas, including:

Broker Dealer

Alternatively known as a Securities Trading Intermediary (PPE), one of the primary activities of a securities company is as a broker-dealer. The role of a broker-dealer (PPE) is to carry out the buying and selling of securities for their own benefit or that of others.

Investors wishing to purchase shares, whether in the primary or secondary market, are required to have a stock account with an official securities company that holds a PPE permit from the Financial Services Authority.

With a PPE permit, securities companies can also carry out stock or bond trading activities, whether processed on the Indonesia Stock Exchange (IDX) or through over-the-counter (OTC) transactions.

Underwriter

An underwriter is also known as a securities underwriter (PEE). As an underwriter, securities companies offer assistance to prospective issuers or public companies in conducting Initial Public Offerings (IPOs).

This underwriting role can be accompanied by an obligation to purchase unsold or unsold securities. Therefore, if there is an obligation to purchase the remaining unsold securities, the issuer can be assured of obtaining funding in accordance with expected requirements.

Investment Manager

As previously explained, an Investment Manager is a company licensed by the Financial Services Authority (OJK) to operate as an Investment Manager. For most investors, an Investment Manager is better known as a service or company that manages mutual fund portfolios from funds pooled from a group of investors. The Investment Manager's activities include managing investor or client securities portfolios according to individual and bilateral management contracts, and do not involve direct securities trading activities like a Securities Company.

A Securities Company can have one, two, or all three of the above scopes of activity, depending on its license.

Fund Management Structure

At a Securities Company, the fund management structure begins with investors opening a stock account or Customer Fund Account (RDN). This account is mandatory for investors who wish to buy and sell shares through the services of the relevant Securities Company.

With an Investment Manager, investor funds are collected through a special mutual fund product and then held in a separate Custodian Bank. The collected funds are then managed by a professional team, optimally aligning with the agreement and type of mutual fund.

For additional information, investors wishing to purchase mutual funds can visit a bank with Mutual Fund Selling Agent (APERD) status and apply for a purchase through a Mutual Fund Selling Agent Representative (WAPERD).

Profession and Certification

The difference between a Securities Company and an Investment Manager lies in the profession and certification required. Securities Companies employ Securities Broker-Dealer Representatives (WPPE) or Securities Underwriter Representatives (WPPE), who are required to obtain official licenses from the Financial Services Authority (OJK).

Meanwhile, professional Investment Managers must be certified as a WMI (Investment Manager Representative) or Investment Manager Representative to be able to manage funds obtained from the OJK.

Understand the Difference Between Securities Companies and Investment Managers to Understand Their Functions

Although both act as intermediaries for investors seeking to invest, Securities Companies and Investment Managers actually have different functions. By understanding the differences, investors can more wisely consider which service is best for their investment needs.

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Active Mutual Funds vs. Passive Mutual Funds: What's the Difference?

 For novice investors, mutual funds are a practical investment instrument that can help them achieve their financial goals because they are managed by professional investment managers. However, when interested in investing in this product, investors need to match their chosen mutual fund type to their needs and financial goals.

For example, compare investing in active mutual funds versus passive mutual funds. As their names suggest, these two types of mutual funds differ in terms of their management strategies, whether active or passive.

Active Mutual Funds vs. Passive Mutual Funds: What's the Difference?

Compared, both active and passive mutual funds can be ideal choices depending on the investor's needs. To understand the differences between active and passive mutual funds, from their definitions, portfolio management, and objectives, see the following explanation.

Definition

As the name suggests, an active mutual fund (or active RD) is a type of mutual fund product where the investment portfolio is actively managed by the Investment Manager. This means that the Investment Manager continuously conducts analysis to optimally purchase or sell investment instruments. This active management is carried out with the goal of outperforming the returns or performance of a benchmark index.

Meanwhile, a passive mutual fund (or passive RD) is a type of mutual fund product where the portfolio management simply follows or mimics the performance of a benchmark index. For example, the Investment Manager of a passive mutual fund will only manage investor capital in a portfolio that tracks the Jakarta Composite Index, LQ45, or other indexes. Therefore, the Investment Manager does not need to conduct analysis to determine the best investment instruments and simply mimics the composition of the target index.

Some examples of passive RDs are ETFs (Exchange Traded Funds) and index funds.

Differences in Portfolio Management

As previously explained, active and passive mutual funds also differ in terms of portfolio management. In active mutual funds, the Investment Manager actively manages the portfolio with selected investment instruments to achieve returns that exceed the performance of the benchmark index. This active management is based on market analysis and in-depth research.

In passive mutual funds, the portfolio is simply structured to align with the composition of a predetermined benchmark index. Therefore, Investment Manager intervention is minimal and only requires adjusting the contents of the mutual fund portfolio to the target index.

Differences Based on Investment Objectives

By actively managing funds, active mutual funds aim to achieve higher returns than the benchmark index. In passive mutual funds, the investment objective is not to maximize profits. Rather, the Investment Manager strives to achieve performance that is as similar as possible to the benchmark index.

Management Fees

Because active management involves a greater number of transactions, management fees, or expenses, are generally higher for active mutual funds than for passive mutual funds. These management fees can significantly reduce potential investor returns, although the amount may not be noticeable.

Potential Profit

Although management fees tend to be higher, active management in active mutual funds (RDAs) has the potential to yield greater profits depending on the Investment Manager's skills and performance. This is especially true if the Investment Manager's analysis is on target and the portfolio's performance significantly exceeds that of the benchmark index.

On the other hand, because they merely match the performance of the benchmark index, passive RDs tend to offer more limited profit potential. However, while they don't aim to outperform the benchmark index, the potential profit from this type of mutual fund is generally stable and easy to predict.

Risk of Loss

In terms of risk of loss, active RDs are considered to have a higher level of risk. This is due to the possibility that the Investment Manager's decisions may not always yield the expected results, especially during volatile capital market conditions that are difficult to predict due to varying sentiments.

Passive RDs, on the other hand, tend to have more predictable risks because large or significant changes in portfolio management are rare.

Transparency of Investment Decisions

The final difference between active and passive mutual funds can be seen in the transparency of investment decisions made by the Investment Manager. In active mutual funds, the Investment Manager's investment decisions are arguably less transparent. This is because decisions to change the investment portfolio in this type of mutual fund can be made quickly to adjust the Investment Manager's strategy and analysis.

In contrast, in passive mutual funds, investment decisions are more transparent and easier for investors to monitor. This is because portfolio management follows the composition of the benchmark index, which is generally open to the public.

So, Should You Invest in Active or Passive Mutual Funds?

After understanding the explanation of active and passive mutual funds, you should have an idea of which product is better suited to your needs and investment goals. If you are looking for high potential returns and are willing to take risks, active mutual funds are ideally the more appropriate choice. Conversely, passive mutual funds tend to be more suitable for investors who prioritize consistent performance, lower risk, and the absence of higher transaction costs.

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Short-Term vs. Long-Term Bonds: Which is the Best Choice?

When interested in investing in bonds, some people may be confused about choosing between long-term and short-term bonds. Both types of bonds are inherently attractive and worthy choices for investors. However, considering the risks and their suitability to financial goals, investors need to carefully consider the product to avoid making the wrong choice.

As the name suggests, short-term and long-term bonds differ in terms of the tenor, or maturity date, they offer to investors. Of course, to make the right choice, investors need to align the characteristics of the bond with their investment needs, financial situation, and goals.

Short-Term vs. Long-Term Bonds: Which is the Best Choice?

So, if you want to know which is the best choice between short-term and long-term bonds, the following explanation is essential.

Reasons to Choose Short-Term Bonds

Based on their characteristics, there are several reasons why investors should choose short-term bonds, including:

They have short-term financial goals, or goals of less than three years, for example, a down payment on a house or wedding expenses.

They are unsure about long-term market conditions and fluctuations.

They want a safe and easy-to-cash investment.

An example of a short-term bond product that investors can choose is the Retail Savings Bond or SBR. SBR offers the potential for stable profits or returns with a low level of risk. This type of bond can also be redeemed earlier before maturity through the early redemption feature, depending on the investor's needs and desires.

Reasons for Choosing Long-Term Bonds

Meanwhile, investors choose long-term bonds for the following reasons:

They have long-term financial goals, or goals exceeding five years, for example, inheritance, retirement funds, and children's education expenses.

They desire financial freedom in the future.

They are prepared to face market fluctuations.

Examples of long-term bond products that investors can choose are Retail Government Bonds (ORI) and Savings Sukuk, which have tenors of five to ten years. With a longer term, these types of bonds generally offer higher coupon yields and are ideal for holding to maturity.

Comparison of Profits and Risks of Short-Term vs. Long-Term Bonds

Straightforward, both short-term and long-term bonds have their own potential profits and risks. Investors who choose short-term bonds can benefit from the potential for more stable returns. Investors can also feel more secure in facing interest rate risk when choosing short-term bonds because their prices are less sensitive to changes in Bank Indonesia's benchmark interest rate.

On the other hand, the advantage of investing in long-term bonds is the opportunity for investors to earn higher returns. However, if these bonds are sold prematurely before maturity, investors could experience losses due to price fluctuations in the secondary market due to changes in the benchmark interest rate.

In other words, the risks and returns of this investment are closely related to the length of the bond's term. The longer the bond's maturity, the higher the potential profits and risks. This is certainly something investors should consider when choosing the type of bond they need and their investment goals.

Short-Term and Long-Term Bond Investment Strategy

As explained previously, short-term and long-term bonds have their own advantages and disadvantages. So, what investment strategy can you use to take advantage of the advantages of each product?

It's simple; you can implement an investment strategy called laddering. With a laddering strategy, you purchase bonds with different durations or tenors, for example, 2 years, 5 years, and 10 years. Each time a bond matures, reinvest the yield and principal into a new bond with the same tenor.

With this strategy, you can enjoy the attractive returns of long-term bonds and the liquidity of short-term bonds.

Understand Your Needs and Risk Profile to Know Which Product to Choose

That explains the difference between short-term and long-term bonds, which can help you decide which product is best for you. Essentially, short-term bonds offer investors security and flexible liquidity, while long-term bonds offer optimal profit potential. So, don't forget to tailor your bond choices to your needs, financial goals, and risk profile to maximize your returns.

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To Avoid Mistakes, Let's Check Out 8 Differences Between Stocks and Mutual Funds Before Choosing

 Many investors recommend stocks and mutual funds as their investment instruments of choice. This is not without reason; both investment instruments offer attractive profit potential and are suitable for investors' goals and needs.

However, many investors remain confused about the difference between stock and mutual fund investments. However, the differences between stocks and mutual funds are significant and can impact your investment performance. If you make the wrong choice, your investment plans could be disrupted and not yield optimal results.

To Avoid Mistakes, Let's Check Out 8 Differences Between Stocks and Mutual Funds Before Choosing

Therefore, to avoid this, consider the following eight differences between stocks and mutual funds to more easily compare the qualities of the two.

1. The Party Selling the Product

One of the main differences between stocks and mutual funds is the party offering the product. If you want to buy a mutual fund, the party you need to go to is an APERD, or Mutual Fund Selling Agent.

As for stocks, you can buy them directly through the stock exchange or certain financial institutions. Fortunately, thanks to advances in digital technology, there are now many online investment platforms that offer stocks and mutual funds. This makes it more practical and easy to purchase these investment instruments through these online investment platforms.

2. Objects Purchased by Investors

When looking at the objects purchased by investors, the difference between stocks and mutual funds is quite easy to understand. A mutual fund is a pool of investment assets managed by an Investment Manager from many investors. So, when you buy a mutual fund, you invest capital in a number of specific instruments, such as bonds, stocks, deposits, debentures, and so on.

On the other hand, shares refer to ownership of a company or asset. In other words, buying shares is the same as buying a portion of the company's ownership. Company profits can also be distributed to stock investors in the form of dividends, and there is the potential for capital gains.

3. How to Purchase Assets

The difference between stocks and other mutual funds is evident in the asset purchase process. In general, the process of purchasing mutual funds is relatively more complex than that of stocks. When purchasing a mutual fund, investors are connected to an Investment Manager and a Custodian Bank, and the investor's funds are managed to purchase specific types of assets.

With stocks, investors simply need to place a buy order with the stock exchange or a third party. The transaction is then completed quickly, and the shares become the investor's property.

4. Involved Parties

Generally, the parties involved in mutual fund investment activities are the Investment Manager, the issuer, the Custodian Bank, and so on. Meanwhile, in stock investments, the involved parties are the issuer or company, the shares, KSEI (Indonesian Central Securities Depository), securities companies, brokerage firms, and so on. However, when investing in either stocks or mutual funds, investors don't always have to deal with each of these parties actively or directly.

5. Stability of Investment Fluctuations

In terms of price fluctuation stability, stocks and mutual funds have quite simple differences. Stocks, known as high-risk investment instruments, tend to experience higher price fluctuations than mutual funds. However, the potential returns provided by these products are also quite promising and suitable for long-term investment.

As for mutual funds, many consider them an ideal choice for conservative or risk-averse investors. Not only are the risks relatively lower, but mutual fund investments are also much easier than stocks because they are managed by an Investment Manager. Therefore, the responsibility for mutual fund performance generally rests with the Investment Manager, while stocks are entirely in the hands of the investor.

6. Fund Management Method

There are significant differences between stock and mutual fund fund management. Mutual fund management is carried out by Investment Managers who have proven competence and are certified in managing their clients' funds. Therefore, mutual fund investors do not need to actively manage their investment funds and simply wait for reports from the Investment Manager and receive their returns.

On the other hand, when investing in stocks, you are fully responsible for managing your funds. Therefore, an understanding of investment knowledge and strategies is essential to maximize potential profits and minimize the risk of loss when investing in stocks.

7. Amount of Initial Capital Required

Furthermore, the difference between stocks and mutual funds can be seen in the amount of initial capital required for investment. As products that pool funds from multiple investors, mutual fund investments can be started with affordable capital. In fact, some mutual fund services offer investment options in their products with capital starting from just 10,000 Rupiah.

This differs from stocks, where the initial purchase capital is relatively large. Investors may even need to set aside millions of rupiah to purchase their desired stocks. Therefore, stocks are more suitable for experienced investors with substantial capital and a strong understanding of investing.

8. Taxation Regulations

Finally, the difference between stocks and mutual funds relates to their taxation regulations. With mutual funds, investors are generally not subject to tax. If tax is imposed, mutual fund taxes are much lower than those imposed on stocks. However, mutual fund investors are still required to file annual tax returns, including the amount of assets and investment profits earned.

So, Is It Better to Invest in Stocks or Mutual Funds?

From the explanation of the differences between stocks and mutual funds above, both investment instruments have characteristics that need to be tailored to the investor's needs. The high risk of stocks makes them more suitable for aggressive investors with long-term financial goals. Meanwhile, mutual funds offer flexibility in management and risk management, making them suitable for beginner investors with a low risk tolerance.

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Understanding the Secondary Market, a Type of Capital Market for Investors to Trade Securities with One Another

 When delving into the world of investment, you're likely familiar with the term capital market. The capital market is a place where governments and companies can raise funds from investors by offering securities to the public. The capital market itself can be divided into two categories: the primary market and the secondary market.

Understanding the Secondary Market, a Type of Capital Market for Investors to Trade Securities with One Another

The primary market can be understood as the type of capital market where securities or securities are first traded to the public before being listed on the Stock Exchange. But what about securities that have passed the offering phase on the primary market? The answer is that these securities can be traded on the secondary market directly between investors.

Of course, securities transactions conducted on the secondary market require a specific process that is important for investors to understand. To further understand what the secondary market is, the transaction process, and examples, see the following guide.

Understanding the Secondary Market

As explained briefly earlier, the secondary market is a type of capital market that is a continuation of the primary market. In the secondary market, securities already listed on the Stock Exchange are traded between investors. In other words, through the secondary market, investors can buy and sell securities already listed on the exchange after an Initial Public Offering (IPO) has taken place.

In the secondary market, securities are bought and sold directly by investors. Of course, depending on the level of supply and demand, stock or security prices on the secondary market are constantly changing and fluctuating. If demand is high and supply is low, stock prices will inevitably increase, and vice versa.

Therefore, to achieve promising profits or returns, you as an investor must be able to identify stocks with the potential to increase in value in the future. This way, you can buy shares at a low price and resell them at a high price to achieve capital gains.

To do this successfully, you need to understand the several factors that influence supply and demand in the secondary market. From specific factors to macroeconomic factors, all factors can influence stock price fluctuations in the secondary market.

For example, a specific factor influencing supply and demand is company or industry performance. Examples of macroeconomic factors include interest rates, currency exchange rates, inflation rates, political and social conditions, and others.

Furthermore, understand that every transaction made by investors in the secondary market will incur transaction fees, such as PPE commissions at securities companies. These commissions are subject to VAT of 10 percent of the transaction amount and are charged to the investor. However, for stock sales orders, the tax levied on investors is 0.1 percent.

Transaction Flow in the Secondary Market

Referring to the explanation from the Financial Services Authority (OJK), the following is the procedure or transaction flow in the secondary market.

Transactions in the secondary market take place on the Stock Exchange via an intermediary, a Securities Company, as an exchange member.

Investors who wish to purchase shares on the secondary market must place a purchase order through the Securities Company. This purchase order specifies the shares to be purchased, the purchase amount, in lots, and the purchase price.

If investors wish to sell, they must place a sell order through the Securities Company. This sell order specifies the shares to be sold, the sale amount, in lots, and the sale price.

Every order placed by an investor is displayed on the Stock Exchange's trading system and can be viewed through the Securities Company's trading system.

Examples of Securities Transactions in the Secondary Market

When a buy order placed by an investor matches a sell order in the stock exchange transaction system, the transaction has occurred and gone through a process known as matching. The asset transfer and payment will then be facilitated by KPEI (Indonesian Securities Clearing and Guarantee Corporation) and KSEI (Indonesian Central Securities Depository).

For the purchase process, investors are required to deposit funds in the nominal amount of the purchase, no later than two business days after the transaction. For the sale process, investors will receive payment no later than two business days after the transaction. However, it's important to understand that all capital market activity is suspended during holidays, so transactions may take longer to complete.

Understand How the Secondary Market Works to Stay Confident When Entering the World of Investment

For every investor, understanding how the secondary market works is essential. This will allow you, as an investor, to invest more smoothly in accordance with your plans and goals. Hopefully, the explanation above helps you understand the secondary market and the transaction flow within it when investing.

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Understanding the Primary Market: A Type of Market for Public Investors to Buy Promising Securities at an IPO

When you dive into the world of stock investing, you may have only purchased securities that have been issued for a long time on the secondary market. The value of these securities generally fluctuates depending on the performance of the issuing company and the interest of investors.

However, did you know that there is a type of market that trades securities that have just been launched to the public for the first time? This type of market is known as the primary market, and it is an important capital market category for stock investors to understand. Securities traded to the public for the first time, known as an initial public offering (IPO), often have promising profit potential.

Understanding the Primary Market: A Type of Market for Public Investors to Buy Promising Securities at an IPO

To understand more about the primary market, its transaction flow, and examples, see the following explanation.

Understanding the Primary Market

According to the Financial Services Authority (OJK), the primary market is a type of capital market where securities or effects are first traded to investors before being listed on the Stock Exchange. The offering period for shares on the primary market is when securities or effects are offered to investors by an Underwriter via a Broker Dealer or Securities Trading Intermediary as the securities selling agent. This process is commonly known as an IPO, or Initial Public Offering.

When offered on the primary market, shares have a fixed price because the company has determined the quantity and price before offering them to investors. Because of this fixed quantity, not all investors will be able to obtain the shares offered on the primary market that they desire.

It's important to understand that investor demand for shares offered on the primary market may not be met when there is oversubscription or excess demand. For example, suppose the initial issue of 100 million shares on the primary market is for a total of 150 million shares, while investor demand for those shares reaches 50 million shares.

In this situation, there is an excess demand for shares of 50 million shares. So, once the shares have been issued, some investors don't receive the desired number of shares they ordered. Naturally, the company will return or refund the excess funds to the investor in full.

Transaction Flow in the Primary Market

Unlike the secondary market, shares traded on the primary market must go through a specific transaction flow that is important for both the issuing company and investors to understand. For further clarity, the transaction flow on the primary market is outlined below.

Investors complete a Share Purchase Order Form (FPPS) and deposit funds into a Customer Fund Account (RDN) at the securities company.

Investors must then submit the FPPS, along with proof of deposit and personal identification information.

The securities company that has received the FPPS will submit it to the underwriter, who will then forward it to the Securities Administration Bureau (BAE) to obtain the share allocation.

When conducting an IPO on the primary market, the company is required to disclose the offering price, quantity, offering period, and various other important information. This announcement can be made through national newspapers, the company's official website, or in the form of a prospectus.

Examples of Securities Transactions in the Primary Market

To better understand the primary market, you can consider the following examples of securities transactions in that market.

Assume Company A conducts an IPO in 2024. The company is known as a leader in its industry and has promising appeal among investors. Because expectations for the company's initial offering are high, many investors believe its stock price will skyrocket rapidly in the secondary market.

With such high interest, Company A's stock offering in the primary market is a resounding success and is completely purchased by investors. If oversubscribed, the company can issue refunds or issue additional shares to meet market demand.

On the other hand, if the stock offering in the primary market falls short of expectations and attracts insufficient interest, the situation is called undersubscription. This occurs when a company's stock offering in the primary market fails to meet its target. In this situation, the company can still obtain the funding it needs because the remaining unsold shares will be purchased by the underwriter.

Buying Shares on the Primary Market Has a Special Appeal for Investors

That explains the primary market and its transaction process. Offering shares to the public for the first time, buying shares on the primary market has a special appeal for investors because it offers the potential for promising capital gains when the shares are listed on the stock exchange. However, it's important to also consider the profile and potential of the issuing company to lock in returns from the securities offered on the primary market when investing.

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What Does Issuer Mean? Here Are Its Functions and Roles in the Investment World

 When investing, you'll likely encounter the term "issuer" frequently. Yes, "issuer" is an important term for investors and capital market players to understand because it relates to the party issuing a particular investment instrument. However, many capital market players remain confused about the meaning of this term.

In fact, some investors don't fully understand the role and function of issuers in the investment world. To learn more about what an issuer means, its functions, and the securities it transacts, see the following guide.

What Does Issuer Mean? Here Are Its Functions and Roles in the Investment World

Definition of Issuer

Quoting from the Financial Services Authority (OJK), an issuer is the term for the party carrying out the public offering process. A public offering conducted by an issuer is an offer of securities sold to the investing public in accordance with statutory procedures.

Another definition of an issuer is an individual, company, corporation, or group of organizations offering securities or debt instruments. Issuers can also offer securities in the form of commercial paper, bonds, shares, debt instruments, Collective Investment Contracts (KIK), derivative securities, and so on.

Issuers also offer Sharia-compliant securities, namely sukuk, whose issuance method must comply with Sharia principles in the capital market. Issuers typically offer securities via the capital market, including bonds, sukuk, and shares.

According to the Big Indonesian Dictionary (KBBI), an issuer is a business entity that issues securities for trading. Therefore, it can be concluded that an issuer is a company whose shares are traded on the capital market.

Differences Between Issuers and Public Companies

According to the Indonesian Dictionary (KBBI), a company can be considered an issuer if it has conducted an IPO, or Initial Public Offering. This means the issuer has offered shares to the public, which can be traded by investors on the capital market. However, there are still several differences between issuers and public companies.

Returning to the OJK's explanation, a public company is a Limited Liability Company (PT) in accordance with Article 1 number 1 of the General Provisions of Law No. 40 of 2007 concerning Limited Liability Companies. A PT has shares held by at least 300 investors and has a minimum paid-up capital of 3 billion rupiah.

Meanwhile, issuers are required to submit a Registration Statement during the public offering process, and public companies must submit a registration statement to become a public company. Regarding this registration statement, the OJK issues an effective statement as an indicator of the completeness and fulfillment of all registration statement requirements and procedures, a mandatory step in accordance with applicable laws.

Therefore, the significant difference between an issuer and a public company is that the issuer is the party currently undergoing the IPO process. Meanwhile, a public company is a Limited Liability Company or PT that has carried out the IPO process.

The Function of Issuers in the Investment World

After understanding what an issuer is, you also need to understand the function and role of issuers in the investment world or capital markets. In general, issuers play a role in providing opportunities for companies and business owners to obtain funding or additional capital.

The presence of issuers can also open up opportunities for investors to invest. Thus, investors can improve their financial condition by investing in securities issued by issuers.

Furthermore, the primary function of issuers is to offer securities to the public. They are also responsible for managing public capital optimally by providing evidence of their accountability through the issuer's quarterly financial reports.

By offering their shares to the public, investors or those who purchase shares will acquire a portion of ownership in the company in question. This also opens up the opportunity for investors to receive dividends.

Furthermore, issuers also have several specific objectives related to issuance, which are generally determined at the GMS (General Meeting of Shareholders), including:

Expanding business opportunities because capital obtained from investors can be used for business expansion, market coverage, or increasing production capacity.

Transferring shareholders from existing investors to new ones.

Improving the funding or capital structure, namely by balancing equity and foreign capital.

Understand the Meaning of Issuer to Understand the Types of Investment Products They Issue

That explains what an issuer is, as a company or party that issues certain investment securities. By understanding the meaning of issuer, you'll be much more informed about the types of investment products they issue. Depending on your needs, you'll be able to consider the best type of product to maximize your investment returns.

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Avoid These 6 Credit Card Mistakes to Avoid Getting Trapped in Debt

 Having a credit card is the key to easier transactions. From shopping to vacations to paying for daily necessities, everything can be done using a credit card. But if you don't manage your credit card properly, it can backfire on your finances.

Just imagine: you take out an installment plan because you saw a 0% promotion on your favorite e-commerce site. Then, next month, you take out another installment plan for a new gadget. Before you know it, your monthly installments have ballooned, and you're starting to struggle with the constant bills. Plus, there's the added burden of late interest.

The above often happens not only because of poor money management skills, but more so because you don't understand credit cards. Many credit card mistakes can be prevented if we're aware and careful from the start. Let's use our credit cards wisely by avoiding the following mistakes.

Avoid These 6 Credit Card Mistakes to Avoid Getting Trapped in Debt

6 Credit Card Mistakes

Consistently Paying Only the Minimum

Many people think that by only paying the minimum amount, they're using their credit card correctly. However, this is a trap that can quickly balloon their bill. Paying the minimum means customers only pay a small portion of the total installment, and the remainder will be charged high interest each month. In the long run, this can make your total debt much larger than you imagined.

If this happens consistently, you might feel like you're paying every month, when in fact, your debt isn't decreasing. Therefore, prioritize paying your credit card bill in full every month to prevent interest from accumulating and to keep your finances under control.

Frequently Using Your Credit Card for Consumptive Items

Credit cards make transactions easier, but don't overuse them and use them to buy things you don't really need. Impulsive purchases like buying expensive fashion or hanging out at trendy cafes can feel easy when you swipe them, but feel heavy when the bill arrives.

If you can't control yourself, you could end up using your credit card every month for consumptive needs without long-term benefits. Try to get into the habit of creating a monthly budget and spending limits. Use credit cards for essential items that you can repay without issue.

Having Many Cards But Not Being in Control

Having multiple credit cards may seem great. It increases your limit and allows you to take advantage of more promotions. But if not managed properly, having multiple credit cards can actually be overwhelming. Many people end up forgetting due dates, forgetting which bills to pay, and ultimately falling behind.

Frequently making late payments or exceeding the limit on one card can affect your overall credit score. This is crucial if you ever need to apply for a mortgage, car loan, or other loan.

Therefore, it's best to manage the number of credit cards you have. If you don't need them, using just one is sufficient.

Ignoring Credit Reports

Another mistake credit card users make is ignoring credit reports. A credit report is a document that records a person's or business's credit history. It's crucial for credit card users to monitor this because it contains all your transactions, including purchases and credit payments.

So, if there's an error in your report—such as an unmade transaction or a bill that's been paid but not yet recorded—you can find out immediately and avoid it impacting your credit application and interest later. Checking your credit report isn't difficult, either, as you can do it on the Cermati app.

Late Payments Without Excuse

If you're just one day late on your credit card bill, the bank can immediately impose a fine and interest. Furthermore, this delay can be recorded in the banking system and affect your credit report. If you're frequently late on payments, not only will it be difficult to get approved for your next credit card, but also other loans or installments because you'll be considered high risk.

Disciplined payment is key to healthy credit card use. Set reminders in your calendar or mobile banking so you don't miss the due date. It's also a good idea to set aside a dedicated cash reserve to pay bills so you don't have to scramble for cash when the due date comes, especially if the bill is large and comes at the same time as other expenses.

Not Reading Promo Terms and Conditions

Who loves hunting for promos? Credit card promos are very tempting. They range from big discounts, 0% installments, cashback, and much more. But often there are hidden terms and conditions that can disappoint users. For example, there might be a minimum transaction, or the promo is only valid for certain purchases for a limited time.

If you don't read the details, you could end up spending more than you planned. In other words, instead of making a profit, you'll end up losing money. Therefore, before using a promo, make sure you read all the terms and conditions and understand when and how the promo applies. If you're careful, you can take advantage of credit card promos to save money on your transactions!

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Is it possible to buy gold using a credit card?

Have you ever thought about buying gold with a credit card? This idea is actually quite appealing. Imagine being able to take home gold bars or gold certificates without immediately draining your savings; you can simply pay later or pay in monthly installments. But before trying, it's a good idea to understand the advantages and risks of buying gold with a credit card.

Can You Buy Gold with a Credit Card?

Can you really buy gold with a credit card? The answer is absolutely yes, as long as the merchant or gold shop you're buying from accepts credit card payments. In fact, they often partner with banks to offer low-interest installment plans, even 0%. But remember, not all shops accept credit cards, so be sure to call the shop, visit them in person, or check their website.

Is it possible to buy gold using a credit card?

Advantages of Buying Gold with a Credit Card

Pay in More Flexible Installments

One of the main reasons many people buy gold with a credit card is the more flexible payment options. Just imagine, you don't have to spend millions of rupiah in a single transaction. Simply pay in monthly installments, according to the chosen term, for example, 3, 6, 12 months, or even up to 24 months.

So, even if your financial situation isn't ready yet, you can still start investing in gold now. Even more interestingly, many banks partner with merchants or gold shops to offer 0% installment programs. This means customers can pay their bills in installments without any additional interest.

You Can Earn Cashback or Points

In addition to installment payments, buying gold with a credit card often offers additional benefits in the form of cashback or reward points. So, while buying gold, you can also earn "bonuses" from the bank.

For example, for every purchase of a certain nominal amount, you'll earn points that can be exchanged for shopping discounts, dining vouchers, or even direct discounts on future transactions. Some banks also offer cashback directly during transactions, especially when there are promotions at certain gold merchants.

Transaction Protection

Not all transactions run smoothly, especially when buying online. One of the advantages of credit cards is their transaction protection feature. If an error occurs, such as an item not shipped, an incorrect quantity, or a suspicious merchant, customers can file a complaint with the card-issuing bank. This process is often called a "dispute." The funds paid can be held until the issue is resolved.

Easy Access

Now, buying gold doesn't require going to a store and queuing. Using your smartphone, you can instantly check the gold price, select the type, and pay with your credit card in minutes. Several official platforms also offer credit card payment options and installment features directly within the app. Investing in gold has become easier and hassle-free.

Risks to Be Aware of

High Interest If You Don't Pay in Installments

While it's very easy to pay with a credit card, there are risks to be aware of if you don't convert your gold purchase into a fixed installment plan. If you only pay the minimum amount and don't convert the transaction into installments, the interest charged can be quite significant.

For example, if you buy gold worth IDR 5 million and don't convert it to installments, then you can only afford the minimum payment. Within a few months, your total bill could balloon. However, gold investments generally provide long-term returns with stable increases. If you can't pay off the balance, the credit card interest will outweigh the increase in the gold's value.

Overlimit and Additional Fees

When purchasing gold using a credit card, don't just look at the nominal price; you should also consider any hidden fees that may be charged. For example, some merchants charge an additional fee for credit card payments. This fee is called a merchant fee and can range from 2–5% of the total transaction.

For example, if you buy gold worth IDR 10 million, the merchant will charge an additional 3% fee. This is quite a large amount, especially if not considered from the outset. Therefore, it's crucial to check for additional fees during transactions.

Furthermore, one common risk is overlimit, which occurs when your total transaction exceeds your credit card limit. If you exceed the limit, the bank will usually charge an additional fee, and the transaction may be rejected.

Gold Price Fluctuations

Gold prices do tend to rise in the long term, but that doesn't mean they never fall. In the short term, gold prices can fluctuate quite sharply depending on global economic conditions, the rupiah exchange rate, and global geopolitical situations. So, if you buy gold when the price is high and then it suddenly drops, the potential loss could be even greater if you haven't paid the installments in full.

Imagine buying gold with a credit card, hoping the value will increase in a few months. But the opposite happens. Therefore, buying gold with a credit card should be done with careful consideration and not simply because you're tempted by promotions or discounts.

Lack of Discipline in Paying Bills

When deciding to buy gold with a credit card, you must have a clear payment plan and a commitment to paying it off on time. The problem is, if you pay late, you'll not only be charged a late fee but also additional interest. These accumulated costs can make installments that initially seemed light actually become a financial burden.

Furthermore, late payments will affect your credit report. A bad credit report will certainly make it difficult for you to take out loans in the future. If you're not confident in your ability to pay on time, it might be better to use other, safer payment options.

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Benefits of Total Loss Only (TLO) Car Insurance

 New and used cars certainly have striking differences, whether in terms of price, performance, or driving comfort. Despite these differences, public interest in buying used cars remains high.

To ensure safer driving, people often insure their cars with a trusted insurance company. One popular insurance product is Total Loss Only (TLO).

Benefits of Total Loss Only (TLO) Car Insurance

What is TLO, and what are the benefits of this insurance? Here's an explanation.

What is Total Loss Only Insurance?

As the name suggests, Total Loss Only (TLO) insurance is a type of car insurance that covers the cost of repairing a customer's vehicle if the damage is severe, amounting to 75% of the vehicle's value. This type of insurance also provides compensation if the insured car is totally lost.

At this percentage, the car can be considered unusable even after repairs. Furthermore, repair costs are also expensive due to the large number of parts that must be replaced. Therefore, Total Loss Only (TLO) car insurance is crucial, as it can cover replacement costs.

Benefits of TLO Insurance

Like most insurance products, TLO car insurance offers several benefits, including:

Protection in Case of Car Theft

No one wants their beloved car stolen, even if it's being replaced with a new one. But misfortune can happen at any time, regardless of who it is. With TLO insurance, you don't need to worry if your car is stolen by an irresponsible party.

To file a claim for a lost vehicle, you need to attach supporting evidence, such as CCTV footage. You'll also need to prepare documents such as an insurance policy and a claim form.

Reduced Repair Expenses

Car repair costs are many times more expensive than motorcycle repairs. Repairs to damaged parts, especially major damage, can quickly drain your wallet. Instead of paying expensive repairs, TLO insurance will cover these costs.

Cheaper Premiums

Car insurance premiums for TLO tend to be cheaper than all-risk insurance, typically around 0.8% to 1.02%. Much cheaper than all-risk insurance, which costs 2.5-3.5% of the car's market price, TLO insurance allows you to save around 1.23% per year. This percentage is also influenced by vehicle category and region, as stipulated by the Financial Services Authority (OJK).

For example, assume a car costs Rp150 million with a 1% insurance premium. This means you'll need to pay Rp150,000 per year. Not a huge amount to protect your car, right? The amount covered by insurance is usually greater than the annual premium.

Please note that the percentages above are only examples and may change according to insurance company regulations or OJK regulations. Consult with your agent or dealer to determine the appropriate premium.

Expandable Benefits

Want to add protection to your beloved car? Don't worry, TLO insurance allows you to expand your coverage. There are seven types of car insurance coverage extensions available, as follows:

Floods, including hurricanes.

Earthquakes and tsunamis.

Riocracy and civil commotion (SRCC).

Terrorism and sabotage.

Third-party legal liability.

Personal accidents for passengers.

Legal liability for passengers.

You can even change your car insurance type to all-risk if needed. Simply fill out the form and complete the required documents, and you'll receive broader coverage.

Before expanding your coverage, carefully review the insurance company's terms and conditions. If you have any questions, please ask the insurance agent or officer directly.

Providing a Sense of Safety and Comfort While Driving

Having car insurance provides an extra sense of safety and comfort while driving. You won't have to worry if your vehicle is damaged by a collision with another driver, as the insurance company will cover the repair costs.

While not everything is covered, the insurance company's compensation is at least a small amount, especially when you add in the compensation for the driver who collided with the vehicle.

TLO Insurance Offers Ample Benefits

With lower premiums than all-risk insurance, TLO insurance is a suitable option if you want protection on a more affordable budget. However, it's important to remember that the protection offered by TLO is not as flexible as all-risk car insurance.

Drive safely. Even with all the protection you have, safety while driving should remain your top priority.

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