Before we proceed, it is crucial to acknowledge the significant impact of market conditions on the performance of Mutual Funds. Considering this, Equity Mutual Funds emerge as a fitting investment choice for you.
Equity Mutual Funds offer potential high returns and are considered a secure investment instrument. Additionally, Mutual Funds are tax-efficient, providing further benefits without imposing a heavy tax burden.
However, you might question the feasibility of generating profits during a market downturn. Let's explore this further and find out!
Benefits of Investing in Equity Mutual Funds
First and foremost, it is essential for you to understand the actual benefits of choosing to invest in Mutual Funds. Here are several advantages that you can get:
- Fund Will Be Managed by a Professional Fund Manager
The first benefit is that you don't have to manage the investment funds yourself. The funds will be directly managed by professional and experienced Fund Managers. Therefore, you don't have to worry about making investment decisions on your own.
Fund Managers will assist you in optimizing the allocation of funds to the right instruments. By choosing the right investment manager, you increase the likelihood of attaining optimal returns.
- Lower Risk Compared to Stock Investments
Equity Mutual Funds, as a form of investment instrument, indeed carry higher risk compared to other types of Mutual Funds such as Money Market Funds, Fixed Income Funds, and Balanced Funds. However, when compared to direct stock investments, this instrument presents significantly lower risk.
If you are interested in investing, but are not ready to take on the substantial risks involved, Equity Mutual Funds serve as an appropriate alternative.
- High Potential Returns
Another advantage is the potential for significant returns from this investment instrument. While Equity Mutual Funds carry higher risks compared to other types of Mutual Funds, they also offer greater potential for profits.
However, it's important to note that the actual return on investment will be influenced by market performance and the investment strategies you employ. By implementing appropriate strategies, you can certainly unlock satisfying return potentials.
- Tax-Free
One of the benefits of investing in Mutual Funds is the exemption from taxes. This means that the returns you earn are not subject to taxation and are received in full. This ensures your investment gains or profits remain optimized.
Unlike other forms of investment that are subject to taxation, Mutual Funds allow you to enjoy the full benefits of your investment returns.
- Safe and Flexible
This investment instrument is assuredly secure as it is directly supervised by the OJK (Financial Services Authority) in Indonesia. You just need to select the appropriate investment platform that guarantees its safety.
Furthermore, this instrument is highly flexible. You have the option to switch to other Mutual Fund products, and its liquidity is higher compared to direct stock investments.
There are numerous benefits that you can experience by choosing to invest in Equity Mutual Funds. However, it is essential to ensure that you also understand the associated risks, making your investment decisions safer to pursue.
The Influence of Market Price on Mutual Funds
The performance of Mutual Funds is significantly influenced by market prices. In this case, it is important to be familiar with the Composite Stock Price Index (CSPI) or commonly known as the "IHSG" (Indeks Harga Saham Gabungan), which serves as a crucial indicator in stock market activities.
The IHSG is used to monitor the movement of stock prices in the market, which also impacts Equity Mutual Fund investments. It has a strong correlation with the Net Asset Value (NAV) in Mutual Fund investments.
During volatile market conditions and when negative sentiments prevail, the IHSG tends to decline. During this phase, investors are advised not to sell their Mutual Fund investments and instead consider adding to their holdings.
It is worth noting that the downturn of the IHSG is typically not long-lasting. Often, the IHSG recovers and positions the value of Mutual Funds in a favorable position.
Typically, investors may feel anxious when market prices decline. However, during such conditions, investors still have the opportunity to potentially profit from their investments.
Tips for Investing in Mutual Funds Profitably Despite Market Downturn
When the market experiences a downturn, there is no need to panic. Try implementing the following tips to ensure profitable Mutual Fund investments even during market downturns:
- Stay Focused on Your Investment Goals
The first tip is to remain focused on your investment goals. Remember, each investor may have different objectives, even if they are using the same investment instrument.
If you have a long-term financial goal of more than 5 years, there's no need to panic over fluctuating market prices. Don't fear temporary price declines. You still have sufficient time until you reach your investment goal. There are opportunities for market prices to rise again, allowing you to achieve your targeted investment returns.
It is highly recommended not to constantly monitor your portfolio. Checking it too frequently will only induce stress, especially during market downturns.
- Restrain Yourself from Redeeming Funds
It is advisable to exercise restraint when it comes to redeeming or withdrawing funds. If your investment portfolio experiences a decline, it is best not to rush into redeeming your investments.
Remember that there is still potential for prices to rise. A market decline does not necessarily persist until your predetermined investment timeline. There are always opportunities for market prices to recover.
If you immediately redeem your investments when the portfolio is down, you may incur realized losses. The value of the Mutual Fund may actually increase in the future, resulting in larger losses for you.
Trust that there will always be an appropriate time for redeeming your investments. When the time comes, you can redeem your investment with significantly greater gains.
- Opportunity for Top-Up
When market prices decline, it is actually an opportunity for you to consider a top-up. Smart investors recognize this as a favorable opportunity to increase their investments at lower prices.
The fundamental principle of investing is to buy when prices are low and sell when prices are high. From this perspective, a market downturn does not necessarily indicate a negative signal.
If the value of your portfolio decreases, you have the opportunity to top up or make additional purchases. This allows you to save more on your investment capital and potentially reap greater profits when the time is right.
However, ensure that you thoroughly analyze the market conditions and future performance of the Mutual Fund. Make sure that the Mutual Fund you intend to top up has strong potential and promising prospects going forward.
- Consider Asset Reallocation
It is worth considering asset reallocation if the decline in value persists for an extended period, especially if you have short-term investment plans.
This situation can occur for investors with shorter investment horizons, such as 1-3 years. If the market prices continue to decline without showing signs of recovery, it may be better to consider asset reallocation.
Choose instruments that are safer and more stable. In this case, careful analysis and observation of market conditions are essential. Avoid making hasty decisions that could result in greater losses.
For example, you can reallocate your funds from Equity Mutual Funds to Money Market Funds, which have lower risks. This can be a suitable choice, particularly for conservative investors.
- Implemetn DCA Strategy
Another strategy that you can apply to continue earning profits during market downturns is to invest in Mutual Funds using the Dollar Cost Averaging (DCA) system.
It is a strategy where you regularly and consistently contribute funds. Investors do not concern themselves with whether the market prices are rising or falling; they continue to invest until their financial goals are achieved.
This strategy helps to balance the investment capital as you invest both when prices are low and high. Ultimately, you will experience more satisfying investment gains.
The key to investing during market downturns is to remain calm. Remember that each investor has their own goals, so never blindly follow the actions of others, especially in a panic when prices are falling.
Additionally, you should ensure that the steps you take align with your risk profile. Making wise and composed decisions during market downturns will help minimize losses and optimize your profits.
Invest in Mutual Funds with DBS Treasures
Investing in Mutual Funds has become easier and more convenient, especially when you choose to invest with DBS Treasures. Here are some advantages offered when you invest with DBS Treasures:
- Fund Management by Investment Managers
The investment funds will be directly held and managed by professional Investment Managers. These Investment Managers are partnered with DBS Treasures and are dedicated to optimizing the investment performance.
- Financial Expert Team
There is a team of financial experts who will broaden your investment knowledge. This team provides the latest and most comprehensive information on market opportunities.
- Easier Diversification
With DBS Treasures, diversifying your investment portfolio becomes easier. You can effortlessly allocate your investment funds across a variety of different instruments, ensuring a safer and more diversified approach.
- Convenient Transaction Applicaton
With the digibank by DBS Application, you can easily register for a Single Investor Identification (SID), sell, purchase, and switch Mutual Funds.
This application also offers access to a wide range of Mutual Fund options. You can explore Mutual Funds based on Investment Managers or specific product categories.
With DBS Treasures, you will have access to curated market analysis from a team of financial experts who will communicate it to you. You will also receive real-time opportunities tailored to your risk profile and portfolio needs, powered by Artificial Intelligence/Machine Learning (AI-ML). Your investment planning will be supported with curated solutions related to investment (Grow) and insurance (Protect), allowing you to quickly and confidently invest through your preferred media. In conclusion, investing in Equity Mutual Funds will be a more convenient and secure experience with DBS Treasures.
Click here to get a more detailed information and start your investment journey DBS Treasurs.
