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The awareness of financial literacy seems to be growing, even among the youngsters. We understand its importance, but often enough we are not sure where to start. Investing in properties or land can be very expensive, and it is absolutely hard to achieve by those who just entered the workforce, or are still in school. Investing is one of the most important habits that you need to build early to get the advantage of time. The younger the person, the bigger compounding benefits that they are going to get. So, here are some basic investment instruments that you can afford with your student allowance.

Stock Market

Warren Buffet bought his first stock, Cities Service, at the age of 11 for $38 a piece. The first thing you will need to do to follow his path is to open a securities account. There are plenty of them that target young people, so you can start with around 100,000 rupiah ($7.05). This securities will provides an application that you can use to make an automated purchase and sell and to look at charts, data, stock volume, etc.

There are dozens of methods in technical analysis that you need to understand to trade successfully. However, if your goal is to have a long-term investment, stock market will become a lot less complicated.

Pay attention to the fundamentals. Attend a seminar to learn how to read financial reports and decide the true stock value of the company. Look for ones that are undervalued. Assess its management and prospect in the future. Will this company prosper in the next 10, 20, 30 years? Coca-Cola (KO), for instance, is not only iconic for its name but dominant in a beverage industry. It was sold at only 2.45 per share in January 1998 and grew to $42.70 in March 2018. Had you invested $1,000 to this stock, you would have ended up with $17,421 today.

Precious Metal

Unlike stock market who promises a higher return, precious metal is there to help protect your money against inflation and retain its value. Gold is also considered as a safe haven that will retain its value in times of economic turbulence. That is why when the economic condition seems to be uncertain, many will move their investment to gold, resulting in a price hike. Paper gold is also a very liquid asset, which makes it perfect for an emergency fund.

There is a special account that directly converts your money to gold and accumulates it, so you don’t have to save a large sum of money to buy your first gold bar. You will be able to purchase whatever amount of gold that you can afford with a convenience of a regular saving account, along with an access to its application. It is useful for monitoring its buy and sell price.

If you want to collect gold bars, there are now many e-commerce websites that sell it from as much as 1 gr. Purchase is made through installment for 6-12 months with 0% interest. Although you have to pay for administrative cost, it’s still cheaper than buying it through banks.

Government Bonds

Government bonds offer higher interest than conventional banks. It is guaranteed by the government and its only risk is if the country goes bankrupt. Some offer early redemption with coupon being paid every month. These bonds will be released couples of times in a year. The fund is then used to help funding government spending. If you are against your country’s making foreign debts, this is a concrete step to truly contribute.

Mutual Funds

Mutual fund is actively managed by a fund manager, so there is a third party standing between you and your portfolio. It consists of three types; bond mutual funds, mixed mutual fund (investing in both bonds and stock market), and stock mutual fun. Obviously, the higher the risk, the higher the return, and these mutual funds have lower to higher risk respectively. The amount of your returns will depend on how aggressive you are as an investor and how much risk you are willing to take.

Obviously, it is wise not to put all of your eggs in one basket. You can start distributing your money but never invest something you cannot afford to lose. Investing is different from saving, stay patient and don’t be greedy! Keep your expenses down and constantly learn about all the instruments so you can make better financial decisions in the future.

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