In recent years, Indonesians’ interest in stock investment for beginners has been increasing. Broad access to information, easy-to-use digital platforms, and technological advancements make it easier for anyone to get to know the capital market.
However, before starting, a basic understanding is very important so that the first step is safer and more directed. To avoid mistakes in investing, it is important for you to understand stock investment and the strategies before starting.
What is Stock Investment?
Stock investment is the activity of buying ownership of a portion of a company that is listed on the stock exchange. By owning shares, investors are entitled to potential profits from stock price increases as well as dividend distribution.
It is important to distinguish between investing and trading. Investment is generally long-term oriented, focusing on the fundamentals of the company, and tends to be more stable. Meanwhile, trading is usually short-term with the aim of taking advantage of price fluctuations. Beginners should understand both concepts before determining their strategy.
Recognize the Risks
Stocks have the potential for high returns, but also the risk of price fluctuations. Their value can rise or fall depending on the company’s performance and market conditions.
Although stock investment offers opportunities for profit, behind it there are risks that cannot be ignored.
1. Market Risk
This is a situation where stock prices can rise and fall drastically in a short time. This condition ultimately causes losses (capital loss) because stock prices fall significantly and investors sell them below the purchase price.
2. Company Performance
When the chosen company’s shares experience a decline in performance or face internal problems. This can have an impact on the value of the shares.
3. Policy or Regulatory Changes
This has an important influence because it can greatly affect stock movements, making it difficult for investors to predict stock prices. This condition ultimately affects investor decision-making, especially for those who do not yet have a mature investment plan.
Read More: Terms in Investment World that are Important to Know
First Steps in Stock Investment
Understanding the first steps in stock investment is the key for beginners to minimize the risk of loss while opening opportunities for long-term gains.
Understand the Purpose and Concept of Investment
Before entering the stock market, it is important to know what your financial goals are, whether long-term, such as retirement funds, or short-term, such as holiday funds.
Investment goals will affect the strategy. For long-term goals, the focus is on selecting fundamentally stable stocks that provide consistent returns over time. Conversely, for short-term goals, safer strategies with easily liquid instruments are usually more suitable.
Choosing a Trusted Securities Company
When starting stock investment, make sure you have chosen a trusted securities company that is registered and supervised by OJK to ensure the security of funds and transactions. Then, when buying shares, it is important to analyze the performance or portfolio of the company.
As a first step, consider shares from the LQ45 or IDX30 index, which are generally more stable and liquid.
Monitoring and Adjusting Stock Portfolio
From time to time, review your stock portfolio. This way, you can find out whether there are shares that are actually causing losses or whether their performance is in line with expectations.
If there are shares that continue to incur losses without any signs of rising, then those shares need to be considered whether to be maintained or better to be sold immediately.
More Article: Basic Understanding of Stock Buying and Selling for Beginners
Success Tips for Beginners
Investing in stocks is not just about buying and selling, but about understanding strategy and managing risks. By learning the basic steps, you can build a strong foundation.
1. Start Learning About Stocks
Learn stock terms, such as blue chip stocks, speculative stocks, potential gains (capital gains and dividends), as well as technical terms that are often used. This can help you read the information you need correctly.
2. Be Wise in Using Capital
One principle of financial management is to use “cold money” for investment or funds that are not needed in the near future. In other words, the funds allocated for investment should not interfere with basic needs or financial priorities.
Therefore, start with a small amount and choose stocks that are relatively stable in price. Also, avoid using debt for investment. That way, you can minimize and manage risks better.
3. Stay Realistic and Rational in Investing
Beginners in the stock market usually have high expectations regarding the results they can earn. It must be understood that patience and consistency play an important role in keeping investment on track.
Investors must remain calm in responding to stock movements. Do not get carried away by emotions when making decisions due to over-investing.
Prepare Yourself for Investing
You must remember that the journey of stock investment is not an instant path to getting rich quickly. Do not rush in making decisions, especially just following trends.
Prepare yourself with knowledge about the stock market and truly understand the steps before entering the world of investment. With thorough preparation, you can be more confident in making decisions, managing risks, and building a good portfolio to achieve your investment goals.
Read More: The Differences Between Stock Investing and Trading You Need to Know
