Archive for the ‘Investments’ Category
The business plan is like a road map for entrepreneurs towards building successful and profitable business. Every entrepreneur who has opened a business or to launch a business, requiring a business plan is well made and based on facts to improve the chances of business success.
Over the decades, research has shown that companies that conduct business plan will beat a company that does not do it. According to various penitential also shows that many small firms are less rigorous in their approach in preparing and developing a business plan.
In fact, not a few entrepreneurs who have never taken the time to prepare and develop a business plan for his business. In the end, affect the high failure rate experienced by small companies due to weak business planning and a lack of run.
Whether it’s Business Plan?
The business plan is a written summary of the plan to establish a company or running a business which contain detailed picture of operations and financial plans, opportunities and marketing strategies and management capabilities. This business plan outlines the direction and objectives of companies who want to achieve, along with achieving the strategy as a road map for entrepreneurs towards building successful businesses.
Business plan, is proof that an entrepreneur has done penitential necessary, adequate studying business opportunities, and ready to run his business with a profitable business model.
Types of Mutual Funds
In general, Mutual Funds Divided 3, namely the Open Fund, Index Fund, and Capital Protected Fund.
Open Mutual Fund
Open Mutual Fund is a mutual fund that can be bought and sold at any time every day exchanges. Open Mutual Fund is divided into several types depending on the contents of its portfolio, namely:
1. Money Market Mutual Funds
Money Market Mutual Funds (RDPU) is a mutual fund that a minimum of 80% of its assets must be invested in money market instruments. The yield and risk at the lowest RDPU other than mutual funds. RDPU intended for those who are very conservative, that’s you who want a regular income with low levels of risk of loss, and has an investment period of less than 1 year. Unlike other mutual funds, NAV per unit at RDPU always at the price of Rp. 1000, while your units will continue to change every day.
2. Bond Mutual Funds
Bond Mutual Funds (RDO) is a mutual fund that a minimum of 80% of its assets must be invested in both corporate and government bonds. The yield on the RDO and the risk is relatively higher than RDPU. RDO is intended for those who are conservative, that’s you who want a little growth in principal value and investment have been able to accept a decrease in investment value for a moment, and has an investment period of between 1 to 3 years.
3. Balanced Fund
Balanced Fund (RDC) is a mutual fund that has the freedom to adjust the composition of its assets, whether stocks, bonds, and money market instruments. The yield on the RDC and the risk is relatively higher than RDO. RDC is intended for those who are moderate, ie you who want a fairly high investment growth and can tolerate fluctuations on the value of investments, and has an investment period of between 3 to 5 years.
4. Mutual Fund Shares
Mutual Shares Fund (RDS) is a mutual fund that a minimum of 80% of its assets must be invested in stocks. Investment in the RDS is the most risky investments, but have the potential for growth in value of investment is relatively high compared to most all types of mutual funds. RDS is intended for those who are aggressive, that’s you who want a high investment growth in the long term and able to tolerate fluctuations in value of investment is quite sharp, and has an investment period of more than 5 years.
In the meantime, certainly in this life must always sda risks you face. Similarly, investing in mutual funds. There are risks in investing in the Fund are:
1. Risk Reduced Number of Units you
This risk is a major risk in investing in the Fund. Decreasing the number of Units you are in a Mutual Fund is due to the fluctuation of the price of assets in mutual funds.
To effect the stock, price fluctuations occur in accordance with the mechanism that occurs in the stock market effect.
For debt securities, the price tends to rise when interest rates fall, and vice versa, the price will tend to fall as interest rates rise.
For money market instruments, interest rate fluctuations follow the existing.
In addition, economic and political conditions also can cause price fluctuations. All the political and legal policies relating to the business may affect the price of a stock. For example, high vehicle tax increase would lead to drop in car sales so that corporate profits fell. This will result in the car company’s stock price declined.
2. Credit Risk
Credit risk is the risk arising on debt securities and money market instruments as debt issuers are not able to fulfill its obligations to pay its debts, or called by default. This course will affect the asset mutual funds so your investment will be reduced.
3. Liquidity Risk
Liquidity risk is the risk that investment managers can not immediately pay off the resale transaction your mutual fund units. To reduce that risk, Bapepam (Capital Market Supervisory Agency) has set up that fund managers should pay back the entire sales transaction within 7 trading days of your transaction. Therefore, always remember to count down the time of the liquefaction process your order your money to be disbursed on time.
However, in exceptional circumstances (force majeure) or events beyond the control of investment managers, whether they can or can not be predicted, the resale transaction process can be stopped for a while.
Index Fund
Mutual Fund Index (RDI) is a mutual fund that managed to get a return on investment similar to an index which is used as a reference, be it an index of bonds and stock indexes. RDI similar to the Open Fund, which can be bought and sold at any time every day exchanges. At RDI, minimum 80% of its assets must be invested in accordance with these assets in its reference index, which is called passive management. RDI is intended for those who want transparency on their investment and believes that passive management will provide a maximum return on investment.
Protected Fund
Protected Fund (RDT) is a mutual fund that will protect 100% of principal at maturity customer. Mutual funds have an investment time period predetermined by the investment manager, but can be liquidated prior to maturity without any guarantee of protection will be principal. In contrast to Open and Fund Index Fund, Capital Protected Fund has offer period so that you can only buy mutual funds at certain times only. RDT is intended for those who are conservatives who want a more measurable return on the investment period specified.
Mutual Funds and Investment Management Products
Often times you heard the saying “do not put all your eggs in one basket”. This proverb teaches you to always be careful. If you have a lot of eggs, sebarlah your eggs in several baskets to minimize the chances of the outbreak of the eggs you simultaneously.
The same thing is true in investing. Mutual Fund is one way to spread “the eggs” or called with your investments diversified investments. Then why Mutual Funds to be one way to diversify an investment?
By definition, the Mutual Fund is a container to collect public funds are managed by a legal entity called the investment manager to then be invested into other financial assets such as stocks, bonds, and other money market instruments. Penginvestasian funds into some financial assets is what is the process of investment diversification.
In Mutual Funds, the fund is not kept by investment managers, but stored in a named party custodian bank. In addition, the custodian bank also serves as administrator of record and provide confirmation on all purchases and sales of Mutual Funds, and calculate mutual fund net asset value each day.
Net Asset Value (NAV) is the total value that describes the Fund’s assets every day. This value is influenced by the purchase and sale of mutual fund investors, apart from the market price of the asset mutual fund itself.
If you buy a mutual fund, the custodian bank will provide a confirmation of your ownership of a number of investment units. Units is the unit that shows your ownership in the mutual funds. The number of units will remain as long as you do not make a purchase mutual funds anymore. The number of units you get depends on the pricing NAV per unit on a day when you buy mutual funds.
NAV per unit is the price obtained from the NAV of a mutual fund divided by the total units outstanding on that day. NAV per unit published daily in various media, including on this web site. You need to know, the high NAV per unit of a Mutual Fund Mutual Fund does not indicate that it is expensive, and vice versa. Generally, the NAV per unit is high indicates that the Fund is long enough so that its assets have experienced a high increase in value.
Costs In Mutual Fund
1. Purchase costs
Is a fee charged every time you buy mutual funds. The cost of this purchase, you can choose to add some money for the cost of purchase, or you can request a fee is deducted from investment purchases that you entered. The amount of this fee depends on the individual mutual fund products.
2. Redemption fee
Is a fee charged every time you withdraw funds. This fee will be directly deducted when you withdraw your mutual fund, so you do not need to make any payment. The amount of this fee depends on the individual mutual fund products.
3. Return on Investment Service Fee Manager
This fee is given to investment managers as a reward for his services in managing the Fund. This fee is calculated daily based on the NAV of mutual funds. However, you do not have to bother to calculate these costs because the custodian bank has to calculate and charge at the NAV that has been reflected in the NAV per unit is published each day.
4. Custodian Fee Return
This fee is given to the custodian bank in return for his services in administering mutual funds. This fee is calculated daily based on the NAV of mutual funds. As the investment manager fee, this fee has been charged to NAB that has been reflected in the published NAV per unit per day.
Advantages of Mutual Funds
Investing in Mutual Funds would provide for your own benefit. Some of the advantages of Mutual Funds are:
1. Managed by Expert
Mutual Funds managed by investment managers who are experienced in world capital markets. Investment manager has the ability to maximize your investment through in-depth analysis of economic and market conditions, the selection of investment strategies, and selection of appropriate assets.
2. Investment Facility Practical and Flexible
By investing in the Fund, you can simply deposit the funds and let the investment managers that make up your investment. You simply monitor your investment results through the NAV / unit issued every day. In addition, the diversity of existing mutual fund product, you can memiliih products according to your wishes. You can also replace products that better suit your choice.
3. Affordable Investment
With Mutual Funds, it is possible for anyone to invest. Enough with the initial fund of Rp. You can already feel the 1 million investment in capital markets. In fact, with my future investment program of DIM, you can invest as little as Rp. 200 000 every month.
4. More Minimal risk
With the amount of funds available in the Fund, access to greater investment diversification. By diversifying investments, the risks will be smaller.
5. Maintaining Your Liquidity
You can withdraw your investment back each day exchange, ie the working day has been established in accordance calendar Indonesia Stock Exchange. This convenience gives you the flexibility to manage your investments in accordance with your financial needs.
6. Transparency in Investing
The entire mutual fund information is always transparent. You can find out your mutual fund assets invested anything. In addition, the investment manager must inform you the risks faced and the costs imposed on you.
The Build-Up Method is a widely-recognized method of determining the after-tax net cash flow discount rate, which in turn yields the capitalization rate. The figures used in the Build-Up Method are derived from various sources. This method is called a “build-up” method because it is the sum of risks associated with various classes of assets. It is based on the principle that investors would require a greater return on classes of assets that are more risky. The first element of a Build-Up capitalization rate is the risk-free rate, which is the rate of return for long-term government bonds. Investors who buy large-cap equity stocks, which are inherently more risky than long-term government bonds, require a greater return, so the next element of the Build-Up method is the equity risk premium. In determining a company’s value, the long-horizon equity risk premium is used because the Company’s life is assumed to be infinite. The sum of the risk-free rate and the equity risk premium yields the long-term average market rate of return on large public company stocks.
Similarly, investors who invest in small cap stocks, which are riskier than blue-chip stocks, require a greater return, called the “size premium.” Size premium data is generally available from two sources: Morningstar’s (formerly Ibbotson & Associates’) Stocks, Bonds, Bills & Inflation and Duff & Phelps’ Risk Premium Report.
By adding the first three elements of a Build-Up discount rate, we can determine the rate of return that investors would require on their investments in small public company stocks. These three elements of the Build-Up discount rate are known collectively as the “systematic risks.”
The weighted average cost of capital is an approach to determining a discount rate. The WACC method determines the subject company’s actual cost of capital by calculating the weighted average of the company’s cost of debt and cost of equity. The WACC must be applied to the subject company’s net cash flow to total invested capital.
One of the problems with this method is that the valuator may elect to calculate WACC according to the subject company’s existing capital structure, the average industry capital structure, or the optimal capital structure. Such discretion detracts from the objectivity of this approach, in the minds of some critics.
Indeed, since the WACC captures the risk of the subject business itself, the existing or contemplated capital structures, rather than industry averages, are the appropriate choices for business valuation.
Once the capitalization rate or discount rate is determined, it must be applied to an appropriate economic income stream: pretax cash flow, aftertax cash flow, pretax net income, after tax net income, excess earnings, projected cash flow, etc. The result of this formula is the indicated value before discounts. Before moving on to calculate discounts, however, the valuation professional must consider the indicated value under the asset and market approaches.
Careful matching of the discount rate to the appropriate measure of economic income is critical to the accuracy of the business valuation results. Net cash flow is a frequent choice in professionally conducted business appraisals. The rationale behind this choice is that this earnings basis corresponds to the equity discount rate derived from the Build-Up or CAPM models: the returns obtained from investments in publicly traded companies can easily be represented in terms of net cash flows. At the same time, the discount rates are generally also derived from the public capital markets data.
Understanding the basic concepts of investing becomes very important in determining the right investment choices in order to achieve the desired goals. Before this we have discussed several investment alternatives available today. Knowledge of investment instruments is not enough, we as individuals also have to understand the basic concepts of investment. Do not just tempted by promises of huge profits but the losses are obtained.
For example, we faced two investment options, the first investment is to buy a house in a nice area for $ 500 million, where we can get the regular form of rent and may sell it in the future at a higher price. Or we better invest in a company of friends to go public, where we can get a dividend every year and sell our shares at higher prices in coming years, which investment option that provides the best results?
Of course, to be able to understand and decide which one is better investment, we as individuals have to understand three basic concepts of investment.