There are several things you should know before investing in mutual funds to avoid making hasty decisions. Read carefully

First, understand the basics of Mutual Fund Regulations

Mutual funds are governed by the Capital Market Law Number 8 of 1995 Article 1 paragraph 27, which states that "A mutual fund is a vehicle used to collect funds from investor communities, which are subsequently invested in a securities portfolio by an investment manager."

Second, Know Your Risk Profile

You need to understand that mutual funds come with risks that are proportional to returns, often referred to as high risk high return. For example, if you are targeting a mutual fund with a 15% annual return, you must also be prepared to experience periods where your investment value decreases by 15% per year or even more. If you are not confident, you should choose a money market fund or a fixed income fund instead.

Third, remember that "Don't put all of your eggs in one basket"

Although mutual funds carry less risk compared to buying stocks or bonds directly, you should still diversify across several asset classes. For example, allocate your emergency fund and short-term needs to a money market fund, and retirement savings to equity funds if you are still young, and so on. This way, you won't need to worry if your equity fund is declining because you can withdraw from your money market fund first, which tends to always rise.

Fourth, understand the purpose of each mutual fund

Understand your needs and wants. Investments allocated to meet short-term needs should be in a money market fund. Before you start investing, it is best to write down all your needs and wants, arrange them in order of priority, and then calculate how much you want to set aside each month.

Fifth, understand how to select a mutual fund

Although mutual funds are typically categorised into four types based on asset class, there are many investment manager options available, right? High profit percentages are certainly tempting, but you need to look at performance over one year, three years and five years. For example, there may be a mutual fund with strong performance over one year, but over five years its return tends to be lower compared to other mutual funds; so you should be cautious.

Sixth, choosing an Investment Manager also requires careful consideration

Choose an Investment Manager that is in the top 10 (you can search with the keyword "Investment Manager with Largest Assets Under Management – of course, Syailendra Capital is one of them) or an Investment Manager that has been established for a long time and has survived various monetary crises. Don't forget to also search online for the Investment Manager's name to find out their track record.

Seventh, the choice of selling agent should also be considered carefully

Choose a selling agent registered with the Indonesia Financial Services Authority (OJK), which you can verify by checking the OJK website. If you are buying mutual funds through a fintech application, you can try to see which one is easiest for you to use. If you are interested, you can also consider the promotions offered by each Selling Agent.

Eighth, pay attention to how the Investment Manager conducts its business

An Investment Manager that complies with OJK regulations will not make guaranteed return claims. You can also verify this by searching for news about the Investment Manager and its directors and commissioners to ensure they are not involved in any scandal.

Happy investing!

Also read:

Why Invest in Mutual Funds Rather Than Buying Directly in the Capital Market?

Between Mutual Funds and P2P Lending, which should you choose?

Why Invest Long-term in Mutual Funds?