NAME : Dedi Atmi Suganda

AFFILIATION : Raden Fatah State Islamic University Palembang, Faculty Of Economics And
Islamic Business, Prody Perbank An Sharia.

This article aims to provide a basic understanding of investing, explain the concept and
how it works, and show the benefits that can be gained from investing. With simple and easy-to-
understand language, this article is designed to help readers who may be new to investing to gain
useful information and start considering investing as part of their financial strategy. The article
introduces investing as the process of allocating money into assets in the hope of earning a return
in the future. Some of the basic concepts explained include return and risk, diversification, time
horizon, and liquidity, which are important to understand for investing to work properly.

In addition, this article illustrates how investing works, from the purchase of assets, the
holding period, to the realization of profits through the sale of assets. Readers will also learn about
the benefits of investing, such as earning passive income, beating inflation, and better risk
management. To give a more concrete picture, this article presents easy-to-understand examples
of investments, such as bank savings, time deposits, buying goods for resale, renting out personal
items, and buying small amounts of gold.

The ultimate goal is to encourage readers to start investing by showing that investments
do not have to be complicated or require large amounts of capital. With a better understanding of
the basics of investing, readers will hopefully be able to make more informed financial decisions
and begin their investment journey with confidence.

INVESTMENT
Investment is the process of allocating money or other resources into an asset in the hope
of earning a profit or appreciation in value in the future. In a financial context, investing often
involves buying assets such as stocks, bonds, property or commodities that are expected to increase
in value or generate income in the form of dividends, interest or rent.

Investment Concepts
1. Return and Risk: A basic concept in investing is the relationship between risk and return.
Investments with high potential returns are usually accompanied by high risk. Conversely,
investments with low risk usually offer lower returns.
2. Diversification: To manage risk, investors often employ a diversification strategy, which
involves spreading their investments across different types of assets. This is done to
mitigate potential losses from one type of asset with gains from another.
3. Timeframe: Investments can be short-term or long-term. Short-term investments are
usually riskier due to rapid market fluctuations, while long-term investments are usually
more stable and have greater growth potential over time.
4. Liquidity: This refers to how quickly and easily an asset can be turned into cash without
losing its value. Highly liquid assets, such as shares from large companies, can be sold
quickly. In contrast, property or investments in businesses may take longer to liquidate.
How Investing Works
1. Asset Purchase: The investor buys an asset that is considered to have the potential to
provide a return. This could be in the form of company shares, government bonds,
property, or other forms of investment.
2. Holding Period: The investor holds the asset for a certain period of time, which can vary
depending on the investment objective. During this period, the value of the asset may
increase or decrease depending on market conditions.
3. Income or Appreciation: If the asset generates income (such as interest from bonds or
dividends from stocks), the investor will receive that income during the investment period.
In addition, the value of the asset may increase (appreciation), so that when it is sold later,
the price is higher than the initial purchase price.
4. Asset Sale: At the right time, based on the investment strategy and market conditions, the
investor will sell the asset to realize gains or minimize losses.

Benefits of Investment
1. Passive Income: Investments can provide passive income in the form of interest,
dividends, or rent. This allows investors to earn income without having to actively work.
2. Value Appreciation: Investments allow assets to grow in value over time, providing
potential gains when the assets are sold in the future.
3. Beating Inflation: By investing, investors can protect the value of their money from
inflation. Invested assets have the potential to grow faster than the rate of inflation, thus
preserving purchasing power.
4. Risk Management: Through diversification, investors can manage and reduce the risk of
their investment portfolio. The risk of one type of asset can be compensated by the
performance of other assets.
5. Tax Advantages: Some types of investments offer tax advantages, such as lower capital
gains than ordinary income, or tax deferral through certain retirement accounts.

Investing is an important way to build wealth and achieve long-term financial goals.
However, it is important for investors to understand the risks involved and conduct thorough
research and planning before making investment decisi.

Reference

Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments. McGraw-Hill Education.

Graham, B. (2006). The Intelligent Investor: The Definitive Book on Value Investing. Harper Business.

Malkiel, B. G. (2019). A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing.
W. W. Norton & Company.

Siegel, J. J. (2014). Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-
Term Investment Strategies. McGraw-Hill Education.

Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset.
Wiley.
Bank Indonesia. (2023). Tabungan dan Deposito. Retrieved from Bank Indonesia.

Otoritas Jasa Keuangan (OJK). (2023). Panduan Investasi untuk Pemula. Retrieved from OJK.

Investopedia. (2023). Introduction to Investing. Retrieved from Investopedia.

Bibit. (2023). Panduan Investasi Reksa Dana. Retrieved from Bibit.

Ajaib. (2023). Cara Investasi Saham untuk Pemula. Retrieved from Ajaib.