Investment Advisors: Roles, Benefits, and How They Guide You in Starting Your Investment Journey

Have you ever heard of an investment advisor? As financial trends evolve, there are now many ways to store money while helping it grow. Aside from saving, people increasingly turn to investing, whether in the capital market or through private partnerships.

Investing allows you to earn passive income over the long term, money that comes in every month without having to work for someone else.

What Is Investment?

Investment refers to the act of saving or allocating funds for a specific period with the expectation of generating profit or increasing asset value.

Today, many investors place their money in various instruments, including trading and business ventures. While investments can offer promising returns, investors must also be prepared for potential risks.

Business and Non-Business Investments

Investments are often associated with business, but some types are not related to business operations. For example, assets that appreciate in value, like gold or property, are forms of non-business investments.

Investing does not automatically make someone wealthy. It requires commitment, discipline, and patience. There are two main categories of investments:

Short-Term vs. Long-Term Investments

1. Short-Term Investments

Short-term investments typically last less than 3 years and provide faster returns. Examples include:

• Short-term bonds
• Stocks
• Certificates of deposit

2. Long-Term Investments

Long-term investments require more than 3 years before generating significant returns. They are ideal for preparing:

• Marriage expenses
• Children’s education
• Retirement funds

For long-term investments, avoid withdrawing funds before the 3-year mark. For example, mutual funds (reksa dana) tend to be more aggressive and offer higher long-term potential returns.

Key Objectives of Investment

Here are some of the main reasons people invest:

1. Earning Regular Passive Income

Investors often aim to earn a steady monthly income, such as investing in a food processing business. From the company’s profits, you receive a percentage of the earnings, determined through mutual agreement.

2. Business Protection and Stability

Investing in a raw material supplier ensures a company never runs out of supply. It also helps maintain competitive pricing, thanks to consistent access to affordable materials.

Benefits of Investing

Besides specific goals, investments offer various important advantages:

1. Increasing Asset Value

For example, buying land and selling it years later at a much higher price.
Asset appreciation requires time and patience, but the long-term gains can be significant.

2. Securing Your Future Needs

Investments like gold or property help prepare for future financial goals, such as children’s education.

3. Avoiding Debt

People who are committed to investing tend to adopt simple, disciplined lifestyles, allowing them to avoid unnecessary debt.

4. Encouraging a Frugal Lifestyle

Because investing requires capital, investors naturally learn to save more and avoid unnecessary spending.

Types of Investment Assets

In general, investment assets fall into two categories:

1. Real Assets

These include both tangible and intangible assets:

• Gold
• Precious metals
• Property
• Land

2. Financial Assets

These involve financial instruments such as:

• Deposits
• Stocks
• Bonds

 What Is an Investment Advisor?

After understanding the basics of investment, it’s important to know the role of an investment advisor. An investment advisor is an individual or institution that provides guidance, advice, and information to help investors make informed decisions.

They operate across several specialized fields, including:

Types of Investment Advisors

1. Certified Financial Planners

Professionals who meet the required standards in financial planning and have passed certification exams.

2. Stockbrokers

Licensed representatives of brokerage firms who handle the buying and selling of securities such as stocks and bonds.

3. Registered Investment Advisors

Firms registered with the Indonesia Financial Services Authority (OJK) or relevant regulatory bodies.

4. Insurance Agents and Bankers

Licensed agents authorized to sell and provide guidance on:

• Insurance
• Bonds
• Stocks
• Mutual funds

Under Indonesian capital market law, an investment advisor is defined as a party that provides professional advice on the buying and selling of securities in exchange for a service fee. Their role is essential in assisting prospective investors in making informed and strategic investment decisions.

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