3 Types of Investment Method pt.2

LetââÅ¡¬ÃƒÆ’¢Ã…¾¢s try to allocate the money concretely.

Here, we will use Mr. A and Mr. B from previous article again as example. LetââÅ¡¬ÃƒÆ’¢Ã…¾¢s imagine how they distribute their assets. Each target result is explained in previous article, the result is as follow:

  • Mr. A (Investment to grow Assets)
    ·Investment principle:Rp. 260.000.000
    ·Each month accumulation :Rp. 3.000.000
    ·Result Target :6.4%=actively managed
  • Mr. B (Investment to make use of the Assets)
    ·Investment principle:Rp. 2.000.000.000
    ·Result Targetl :4.7%=standard type

If we adjust it with previous money graph, then each Mr. A and Mr. B investment funds are better invested like as shown below:

 

portfolio mr. A

    • Mr.A Portfolio
      :Rp. 26.000.000·Domestic stocks (10%)
      :0? ·Domestic bonds (0%)
      ·Developed country stocks(30%):Rp. 78.000.000
      ·Developed country bonds(20%):Rp. 52.000.000
      ·Emerging country stocks(30%):Rp. 78.000.000
      ·Emerging country bonds(10%):Rp. 26.000.000
      Total Rp. 260.000.000

portfolio mr. B

    • Mr.B Portfolio
      :Rp. 4.000.000·Domestic stocks(20%)
      :Rp. 0·Domestic bonds(0%)
      ·Developed country stocks(20%):Rp. 400.000.000
      ·Developed country bonds(30%):Rp. 600.000.000
      ·Emerging country stocks(10%):Rp. 2.000.000
      ·Emerging country bonds(20%):Rp. 400.000.000
      Total Rp. 2.000.000.000

    Just like Mr. A and Mr. B, you could start thinking how would you distribute your assets.

 

How should we allocate in accumulating investment?

One more thing, letââÅ¡¬ÃƒÆ’¢Ã…¾¢s talk about the accumulating investment.

In mutual funds investment, there will be a major difference in result relating to whether you do additional investment or not and also the length of the investment period. Furthermore, even if in the beginning of your investment you donââÅ¡¬ÃƒÆ’¢Ã…¾¢t have much money until your investment is hundreds of million rupiah, you could still invest continuously with accumulating investment by investing little by little each month, for example Rp. 1.000.000.

About monthly accumulating investment, the ratio of fund distribution are according to what has been show in page 2. However, please note the points below!

If you subscribe to several kinds of mutual funds with minimum top-up Rp. 1.000.000 for instance. When investing in accordance to asset allocation in page 2, the ideal is to invest with accumulating investment as Rp. 1.000.000 X 5 (or 4), that means the surplus fund needed each month is Rp. 4.000.000 ââÅ¡¬“ 5.000.000. The truth is, not many people can afford to invest that much.

Just like Mr. A and Mr. B with actively managed fund investment type, if you are in this condition ââÅ¡¬ÃƒÆ’…although I combined 5 type of mutual funds, I only have surplus money Rp. 3.000.000 per monthââÅ¡¬, then what should you do?

Because of that, let me introduce you several method that can keep your investment need with limited fund without breaking the portfolio balance.

Searching for mutual funds with less than Rp.1000.000 minimum top-up
Lately in Japan there are internet securities companies that offer way to do top-up with less than 10.000 yen (aroud Rp. 1.000.000) which called ââÅ¡¬ÃƒÆ’…Minimal Mutual Fund InvestmentââÅ¡¬. Normally in Japan, the minimum for top-up is 10.000 yen. Such companies are still limited in number, but you can try to find one that offer such service. With this method, the benefit is once you subscribe, then automatically you will accumulate funds as you set previously.

Buying alternately each 2 month
As example, with accumulating Rp. 2.000.000 per month, if you can combine portfolio into 4 types, then the method is buying alternatingly, for example investing in domestic bonds and stocks mutual funds each Rp. 1.000.000 in January, then in February investing in emerging country bonds and advance country stocks, then in March emerging country stocks and advance country bondsââÅ¡¬¦ÃƒÆ’Æ’¢ÃƒÆ’¢Ã…¡¬ and so on. This way, point which can not be automatically set using automatic investment might be a hassle, but you can still maintain the balance as much as possible.

Buying all investment assets class with pace of 1 year or half year
For those who think ââÅ¡¬ÃƒÆ’…buying each 2 months is annoying!ââÅ¡¬, then there is also a method to buy it according to cycle you set, like 1 year or half a year. You will piling-up investment budget for several months.

With any investment method, as long as fund that will be invested on accumulating investment is set, then investing it in any time is not a problem. After investing for some period, it is better if you review the total balance of the investment. About this point, perhaps I will explain it on the next article on method to select mutual funds. Please look for it!.

 

Next : Choosing Mutual Funds