Building an Investment Portfolio from Scratch

Jul 13, 2024

Building an Investment Portfolio from Scratch

Introduction

  • Common investment approach: 50% in stocks, 30% in mutual funds, 20% in crypto
  • The lecture addresses building an investment portfolio for beginners
  • Contrast between diversification and asset concentration
  • Investment should be based on analysis
  • Portfolio building is tailored for beginners

Step 1: Know Yourself

  • Risk Profile: Measures how much risk one can tolerate
    • Personal examples: Different reactions to market drops
  • Questions to assess risk profile:
    1. Marital status: Married or single
    2. Understanding of investment: Yes or no
    3. Investment experience: Yes or no
    4. Investment period: Less than 5 years or more
    5. Reaction to a 20% drop in investment value: Sell or buy
    • More left answers indicate a conservative risk profile
    • Risk profiles can change over time (e.g., single to married)
    • More understanding of investment often leads to a more aggressive profile
  • Warren Buffett quote: "Risk comes from not knowing what you invest in."

Step 2: Know Your Investment Objectives

  • Timeframes for financial goals:
    • Less than a year
    • 1 to 5 years
    • More than 5 years
  • Moderate risk profile example:
    • Getting married in 2 years: use 100 million IDR target, start with 10 million IDR
      • Recommended products: fixed income mutual funds, gold, peer-to-peer lending
    • Investment example: Start with what you understand (e.g., fixed income mutual funds)
  • Long-term goals:
    • Child's education in 8 years: 25 million IDR target
      • Use investment calculator for monthly saving requirements (e.g., 300k IDR/month)
      • Suitable products: stocks, crypto

Practical Application

  • Consider multiple financial goals and differentiate strategies
  • Investment calculators can help with planning
  • Monthly top-ups are recommended according to understanding and comfort with risk

Choosing Investment Instruments

  • Emergency fund: For single individuals just getting married:
    • 6x monthly basic expenses (e.g., 3 million IDR x 6 = 18 million IDR)
    • Split emergency fund between savings and RDPU
  • Moderate risk portfolio: Example
    • Savings: 9 million IDR (28%)
    • RDPU: 9 million IDR (28%)
    • RDPT: 13.7 million IDR (43%)
    • Bluechip shares: 0.3 million IDR (1%)
    • Monthly top-ups in RDPT and shares
  • Using platforms: Online stock and mutual funds purchasing (Magic code benefits)
    • BCA and BRI for long-term investment
    • Considering buying shares selectively (e.g., 300k IDR per month for child’s education)

Conclusion

  • Investment allocation can change over time
  • Adjust according to status, objectives, and risk profile
  • Invite questions and potential for a sequel video

Useful Resources:

Final thoughts: Begin with small, manageable investments and grow as your understanding and comfort increase.