1. Startups

Today's Investment for Indonesia's Young Generation

Summary of the #SelasaStartup discussion regarding current investments with Marco Poetra Kawet (IDX) and Vivi Handoyo Lie (Bibit)

Digitalization has had a significant impact on the development of the investment world in Indonesia. Technology penetration is believed to have diminished entry barriers or circumstances that prevent people from starting to invest. Starting from the presence of a technology platform to the dissemination of literacy content, it is a 'provision' for the younger generation to start investing.

DailySocial.id invited two related figures to discuss the current condition of the investment industry for Indonesia's young generation in a discussion session #TuesdayStartup. They are Head of IDX Marco Poetra Kawet and Head of Financial Education Bibit Vivi Handoyo Lie.

In general, investing is when we place something in the present with the hope that it will grow in the future. This includes investing in yourself. Regarding finance, investment is heavily influenced by the selection of the right instrument. "The right investment instrument will bring you to achieve your financial goals. If it doesn't grow, it means something is wrong," said Marco.

There are several reasons why many people are still reluctant to start investing. First, the assumption that investment requires a lot of money. Second, the investment process is considered complicated, coupled with a lot of negative sentiment due to fraudulent investment cases that happen to ordinary people.

Another before, another now. Investment nowadays no longer requires investors to come in person for every administrative process. The role of regulators that enable digitization in this sector, such as eKYC, has a significant impact on the growth of today's investment world. Evolution in this sector is greatly assisted by digital infrastructure, internet penetration, as well as usage smartphone.

Technology platform contribution

App presence wealthtech with multi-asset investment is claimed to be one of the factors driving the upward trend of retail investors. This is because they can integrate multiple asset classes to expand their portfolio, monitor their assets, and help plan for long-term goals.

Based on data from the Indonesia Stock Exchange as of 14 October 2021, the number of capital market investors has grown by 489 percent to reach 6,5 million investors, compared to 2017 million at the end of 1,12. This is also driven by increased public awareness of investment.

As an IDX representative, Marco said that his party welcomed technology startups that had provided investment platforms. He also presented information that around 80% of the total investors in the capital market are young people, the average age is under 40 years.

"The role of the younger generation is very large. With this large number, it certainly requires support from all stakeholder. We hope all stakeholder permanent comply with existing rules. We give as much flexibility as possible to attract investors using various platforms and social media there is," he said.

Seeds itself has a mission to facilitate access to investment, including by collaborating with other technology companies. One of the partners is Bank Jago. They want to create as wide a network as possible. With collaboration, the hope is to create features that make the investment more meaningful value.

"In the future, we don't only want to make it easier for investors to start, but also in choosing the right investment instrument, as well as in going through each process. We want to present a solution that scalable. We start from Stockbit for stocks, then we present Seeds, for novice investors," said Vivi.

In Indonesia itself, apart from Seeds, there are many platforms that offer easy investment for beginners such as moduit which indeed explicitly targets the younger generation as its target. There are also Wonderful which recently offered investment in crypto assets, one of the instruments that is also in great demand by the public.

Dissemination of literacy content

Based on data from the Financial Services Authority (OJK), financial literacy index Indonesian people are at the level of 38,03% in 2019. This figure shows, out of every 100 people in the population there are only around 38 people who have a good understanding of financial institutions and financial service products. Thus there are 62 other residents who do not yet have financial literacy.

One of the strongest investment drivers is FOMO or fear of missing out. Many people are talkative and end up just joining in. Even though this can plunge them into the investment pool, you still have to be wise in choosing. Marco conveyed the importance for investors to have their own analysis.

Today's generation is very spoiled with platforms that present company data that has been processed by provider. It's not like in the past, where you still have to look at the financial statements of each company. This platform can be used as a reference, but still adjusted to personal preference and risk profile.

Likewise, content related to investment and financial literacy has been circulating more and more. Even so, you still have to be selective in filtering information. Ensure the reliability and legality of the source. Technology platforms such as Seeds also offer free classes for those who want to deepen their understanding of investing.

Onboarding Education mindset That's important, don't just look for quick profits. This investment concept is more to marathon. In essence, investing requires commitment and effort. "If you can without any effort and analysis on stocks, everyone can be rich. There must be a willingness to learn," said Vivi.

According to Vivi, investment instruments that are suitable for beginners cannot be generalized. Choose an investment that fits your timeframe and risk profile. Stocks have a higher risk profile, they move more volatile. On the other hand, bonds are simpler in the long run. Likewise for the short term, there are other options. Back to the instrument selection.

Instruments such as mutual funds can be an option, because there are professionals who help manage it. In addition, there are also Government Securities (SBN) for beginners, but funds must be stored for a long time. There are various investment strategies referring to the instrument.

"What you want to invest is, there are many choices of investment instruments. It doesn't matter which way you lean. The point is, the younger generation invests in the right direction. Regarding the portion, it can be adjusted," said Marco.

Investment in the midst of recession issues

According to Marco, Indonesia is currently trying to change the pattern of saving society going to investment society. The ecosystem is and is still ongoing. Even in the midst of the global recession issue, Indonesia's economic growth is said to have skyrocketed, with the contribution of the younger generation to 60% of the country's GDP.

Regarding investment amidst the threat of a recession, Vivi stressed that in the economy and capital market, ups and downs are normal. Recession itself is nothing new. According to his calculations, no matter how bad the decline is, the market will always return to its initial value, even higher. Vivi advised, "For those who have started investing, if you are worried, remember the initial goal of investing. For those who haven't started yet, don't let the recession issue be an excuse for not wanting to start."

Marco added that there are four economic fundamental indicators. First, the rupiah exchange rate with USD is low, it doesn't mean we are down. It involves global domination, America shows that with USD influence. Second, the occurrence of inflation which then tried to be suppressed by increasing interest rates. Third, the country's foreign exchange reserves. Then, lastly, non-performing loans (NPL) to calculate the community's ability to complete its responsibilities.

According to Marco, people who succeed are people who can see the momentum. "It's about momentum. Do you want to be the one who is consumed by the issue or take the momentum? A recession can be a consideration, but it doesn't deter investment," he concluded.

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