Financial Literacy for Young Investors: Why Early Investing Matters for Your Future

Wealth-management tech startups believe that young investors play a crucial role in strengthening the investment ecosystem. This is supported by the growing enthusiasm among younger generations, who are increasingly confident and proactive about investing.

Today, investors are no longer limited to older or financially established individuals. Thanks to digital platforms, young people can now easily begin investing with minimal barriers.

The Rising Trend of Financial Literacy Among Young Investors

Data from the Indonesian Central Securities Depository (KSEI) shows that by mid-2020, the number of young investors increased by 50%, a significant rise compared to the previous year.

This surge reflects how technology has made investing more accessible. The millennial and Gen Z generations are now actively entering the stock market and other financial instruments.

Investing as a Path to Financial Freedom

Investing, especially in the stock market, can become a powerful strategy to achieve financial freedom. The principle is simple: Instead of working for money, your money works for you.

There are many investment instruments available today, including:

• Property
• Land
• Cryptocurrency
• Stocks
• Forex
• Gold
• Precious metals
• And more

Even with small capital, investing allows young people to learn, grow, and build long-term wealth.

What Is the Stock Market?

A stock represents a share of ownership in a company. Meanwhile, the stock market is a platform where these stocks are traded.

In this market, investors can buy and sell shares across various companies. Before participating, it is important to understand how trading works, study market behaviour, and learn how to analyse stock movements.

What Are Securities Companies (Sekuritas)?

In investing, you don’t purchase stocks directly from public companies. You must go through a licensed securities company, often referred to as sekuritas.

A securities company is an institution authorized by the Financial Services Authority (OJK) to:

• Act as a broker for buying and selling securities
• Underwrite securities issuance
• Conduct transactions under regulated guidelines

This ensures your investment activities are safe and compliant.

Why Millennials Should Start Investing Early

Encouraging young adults to be financially literate is not always easy. However, early investment offers long-term benefits that greatly improve financial stability.

Many people assume that investing requires large capital. In reality, you can start with a small amount, especially through instruments like gold or precious metals.

Benefits of Investing in Stocks

Modern stock investing is very accessible; even beginners can start from as little as IDR 100,000. Stocks generate profit through two main mechanisms:

1. Capital Gain

The profit you earn when selling a stock at a higher price than its purchase value.

2. Dividends

A portion of a company’s profits is distributed to shareholders. These two return sources make stocks one of the most popular instruments among young investors today.

Common Investment Instruments for Beginners

Here are several popular and beginner-friendly investment instruments:

1. Stocks

Stocks represent ownership in a company, giving you the right to earn dividends and benefit from company growth.

2. Mutual Funds (Reksa Dana)

A mutual fund pools money from investors and allocates it into instruments such as:

• Stocks
• Bonds
• Deposits

There are four types of mutual funds:

• Fixed income
• Equity
• Mixed
• Money market

You can choose based on your financial goals and risk tolerance.

3. SBR (Saving Bond Ritel)

A government-issued retail bond specifically for Indonesian citizens. It offers coupon-based returns and supports national budget financing.

4. ORI (Obligasi Ritel Indonesia)

Another government bond was sold to individual investors. It has a minimum purchase amount and provides steady, fixed returns.

5. Deposits

A simple investment instrument offered by banks with fixed interest rates over a set period. Deposits may be stored in IDR or foreign currency, with terms ranging from 1 to 24 months.

Choosing the Right Investment Instruments

Investment losses often occur not because of market movement, but because investors don’t understand the instruments they select.

Before investing:

• Study each instrument
• Understand its risks and potential returns
• Evaluate whether it aligns with your current financial situation

Access to online learning resources makes this easier than ever.

Building investment awareness among young people is essential for long-term financial security. By understanding available instruments and choosing those that suit your needs, you can start building a solid financial foundation early.

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