Getting to Know Some Investment Instruments Want to Profit or Lose. Investment is an important thing that a person must do to protect the value of his assets.

Imagine an illustration where you have 100 million in cash and decide to keep it on a debit card, with an average annual inflation of 3 percent. 10 years later the treasure you have in your savings is reduced to about 70 million. 

This does not include administrative fees that you have to pay every month to the bank where you deposit. Thus, the real value of money that is always decreasing requires us to invest the assets we have.

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Currently there are various types of investment instruments that you can try. In this article, we would like to introduce you to the various types of these instruments.

Getting to Know Some Investment Instruments Want to Profit or Lose

Let’s get to know how some investment instruments work, the advantages and disadvantages you need to know

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1. Deposit

The most common form of investment used by people is time deposits. Almost every bank has this investment product. The way it works is very simple and easy for laymen to understand.

So you are asked to deposit a certain amount of funds with the bank within a certain period of time, usually from 3 months to 10 years. During this period, you will be promised a certain amount of interest.

For example, most banks usually charge around 6% interest per year on time deposits. You have to put a minimum of capital in order to start investing through this instrument. Some banks set a minimum capital of 500 thousand per month to 5 million per year.

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The advantage of this type of investment is that the rate of return is fixed, so the risk is lower. You will get a relatively more definite profit through this instrument.

While the drawback is that you cannot withdraw the money that has been deposited before the tenor expires. If you wish to cash it out, you will be penalized by a certain percentage as a consequence

2. Stock

In addition to deposits, stocks are a very popular investment product today. Technically, when you buy stock on an exchange, that means you buy a percentage of the ownership of the company that sells the stock.

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By buying the ownership certificate, you have the power to determine the board of commissioners and the direction of company policy, of course it will depend on the percentage of share ownership.

The greater the percentage of ownership, the greater your power in the company. Usually, the profits from investing in stocks come from two sources.

First, it comes from capital gains. So, let’s say you bought 100 shares of stock for 10 million today. The next day, it turned out that the valuation of the 100 shares had increased to 15 million.

This way, you can get a yield of IDR 5 million less administration fees and taxes if you decide to sell your shares.

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You can get capital gains in a matter of days, even hours, depending on market sentiment on the issuer of the shares you own. In principle, capital gains are obtained when you ‘buy cheap, sell high’.

Second, in addition to capital gains, you can get benefits in the form of dividends. Dividends are part of the company’s profits that are given to shareholders.

The amount of this profit is very dependent on the percentage of your ownership in the company that pays dividends.

Unfortunately, not all companies regularly provide dividends. However, usually state-owned companies routinely provide profits to shareholders.

Unlike deposits, the weakness of investment instruments is in the uncertain rate of return.

You can get very high profits, but you can also make no profit at all or even lose.

This depends on many factors, ranging from company performance, economic conditions, to the psychological state of the stock market. Observe and analyze these factors so that your investment is maximized.

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Routinely conduct technical analysis related to historical company financial reports, global factors, currency movements, economic conditions, national politics, and other factors in the media.

3. Cryptocurrencies

Cryptocurrency or digital currency is a relatively new investment instrument, but it is very popular lately. How not, the value of one of the digital currencies, bitcoin, in the last 5 years has increased to an extreme level of US$ 9,566. Whereas in 2012, bitcoin only had a value of US $ 5-7 per chip.

That means, within 5 years those who have 100 bitcoins in 2012 can become millionaires.

Digital currency does not have a physical form, but you can still use it to transact digitally/virtually. This currency can also be exchanged into physical form.

The way this investment instrument works is similar to stock capital gains. You buy cheap and expect to sell them at a higher price.

Apart from buying, you can get this currency by ‘mining’. Of course ‘mining’ here means ‘mining’ virtually. So you are asked to crack a complex encryption code to get some digital currency.

If you don’t want to bother decrypting the code manually, you can install a special program on your computer to help. But to run this program you must have a high capacity computer.

The benefits of investing through digital currency are indeed very high. However, along with the high level of profit, the risk of the instrument is also high.

Unlike stocks, digital currencies have no real economic base. When you invest in stocks, you can see the performance of the issuer whose shares you bought and its market potential.

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Meanwhile, when investing in this instrument, you should fully pay attention to the sentiment of the cryptocurrency market. If the sentiment is positive, the value of the cryptocurrency will rise. But if it is negative, then the opposite will happen.

The rate of fluctuation of this currency against physical currencies is also quite high. As an illustration, the price of your 1 bitcoin this morning could be worth US $ 9,566, but in the afternoon you can find the bitcoin changed in value to US $ 9,500, and in the afternoon to US $ 10,000. This makes the risk on this instrument difficult to predict!

4. P2P Lending

The product you can try is online peer to peer lending (P2P lending).

Nevertheless, you can get a fairly large return and relatively guaranteed security.

For example, at KoinWorks you can earn flat interest profits of 9-20% in a year.

In terms of security, KoinWorks provides protection funds that can be used to compensate for the remaining principal capital losses if at any time the debtor fails to pay.

However, the number of individuals or companies that fail to pay at KoinWorks is still low, at less than 0.5%.

The advantage of investing in this sector is how easy it works.

P2P lending companies act as a marketplace where you can determine which individuals/companies you will lend money to.

You can also see the percentage of yield, tenor, and credit score of various individuals/companies from the P2P lending company’s applications and websites.

In addition, you can start investing with relatively low capital. At KoinWorks you can start investing with a minimum capital starting from 100 thousand without a maximum nominal.

In terms of risk, it is actually similar to bonds. The inflation factor determines how much real return you will get in the long run.

Meanwhile, the risk of default by the Borrower remains possible in this investment sector.

5. Bonds

trusted type of investment – bonds

This instrument is similar to a deposit. The difference is, the returns you can get tend to be dynamic.

When you buy bonds or debt securities, you will get certainty about how much the nominal yield or coupon is with an amount that ‘tends to be certain’.

The yield tends to be certain because you can sell the bonds you own on the secondary market. For example, imagine the following illustration:

You decide to buy 100 million bonds in 1 year at 6% interest. That means you will get a return of 6 million or a total return of 106 million when it is due.

However, before maturity is complete, you have the opportunity to sell the bonds, for example, at a price of 101 million.

That means, you decide to take only 1% profit. This allows you to reduce the risk of a decline in the real value of your notes due to inflation or corporate defaults.

You can also buy government-issued bonds that have very low risk. The risk of government bonds is very low because governments are relatively less likely to default than companies.

As previously mentioned, the risk of this investment instrument lies in annual inflation. Inflation always means that there is a depreciation of the value of money.

As an illustration, let’s say inflation in a year is 3%, while your annual bond coupon is 6%.

This means, in real terms, the profit you get is only 3%. The uncertain inflation variable is the biggest contributor to the risk of this investment instrument.

6. Mutual Funds

Mutual funds are one of the investment instruments. If you don’t want to bother taking the time to analyze money market conditions to find out which instruments are more likely to be profitable, then channel your investment capital through mutual funds.

The way this instrument works is similar to stocks. So, you buy a number of mutual funds from a company you trust. Later, the money you give them will be managed by the investment manager.

The money will be rotated and the profits will be given to you after deducting the services and part of the profits taken by the mutual fund company.

There are variants of mutual funds that you can buy. The variant you buy can affect what sector the investment manager will channel your money into.

If you decide to buy a stock mutual fund, it means that the investment manager will manage most of your money in the stock sector.

Meanwhile, if you buy a fixed income mutual fund, most of your money will be channeled into bond instruments.

These instruments tend to be safer than you directly managing your stock or bond portfolio, because investment managers spend more time analyzing various investment instruments for you and they are definitely experts in their fields.

In terms of risk, mutual funds are the same as stocks and bonds. There is still a risk of loss due to company failure or market pessimism.

In addition, the profits you get must also be deducted to pay for investment managers, mutual fund companies, and taxes.


The last is the conclusion. So, there are various types of investment instruments. Every investment sector does have risks. The higher the profit, the greater the risk you face.

If you are a person who dares to take high risks, stocks and cryptocurrencies are suitable investment vehicles for you.

However, if you are looking for a safe investment mode, then deposits, bonds, and mutual funds are recommended.

If you want to start investing with low capital, but high returns, then investing through KoinWorks can be the best tool.

Diversify your portfolio to reduce investment risk, because if at any time one of your investments fails, you are still very likely to benefit from investing in other sectors.



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