INVESTMENTS

DEFINITION OF INVESTMENT
Investment is the commitment of a number of funds or other resources do at this point, with the aim
of obtaining a number of advantages in the future.
Example:
1. Investing in stocks to profit from rising stock prices or pay dividends.
2. When you sacrifice to learn.

INVESTING ACTIVITIES
Investment activities can be done in a number of assets such as:
1. the real assets (land, gold, machinery, or buildings).
2. Financial assets (deposits, stocks, bonds, options, warrants, or futures).
Financial assets are in the form of securities claims on a number of assets issuer of such securities.

DEFINITION AND TYPES OF INVESTORS

The parties who perform investment activities are called investors.
Investors can generally be classified into two, namely:
1. Individual Investors (retail investors)
individual investors comprised of individuals who perform investment activities.
2. Institutional investors
institutional investors typically consists of insurance companies, fund depositary institutions
(banks and savings and loan institutions), pension funds, and investment companies.

RELATIONSHIP BETWEEN THE INVESTMENT AND CONSUMPTION

Welfare indicated by the sum of monetary income current and the current value (present
value) of income in the future.

People should make a decision as to how much current income that should be spent or
consumed and how much should be invested according to his preference.

INVESTMENT OBJECTIVE
1.
2.
3.
4.

To get a better life in the future.

Reducing inflation.
The urge to save on taxes.
Etc.

INVESTMENT PROCESS
Investment process includes understanding the basics of investment decisions and how to organize
activities in the investment decision process.
The basic thing in the investment decision process is understanding the relationship between
expected return and risk of an investment.
The relationship of risk and expected return of an investment is a direct and linear relationship. This
means that the greater the expected return, the greater the level of risk that must be considered.

BASIC INVESTMENT DECISION

1. Return
Return to expect investors from its investments is compensation for the opportunity cost
(opportunity cost) and the risk of declining purchasing power due to the effects of inflation.
In the context of investment management, it is necessary to distinguish between the expected
return (expected return) and return that happens (Realized return).
Expected return (expected return) is an anticipated rate of return investors in the future. While
the return is happening (Realized return) or actual return is the rate of return that has been
obtained by investors in the past.
2. Risk
Risk can be defined as the possibility of actual returns that are different from the expected
return. Specifically, referring to the possibility of the realization of the actual return is lower
than the expected minimum return.
The expected minimum return is often also referred to as the required return (required rate of
return).

INVESTMENT PROCESS
Investment process shows how should an investor making an investment decision on the effects that
can be marketed to the necessary stages as follows:
1. Determining the Investment Objective
there are three things that need to be considered in this stage are:
The expected rate of return (expected rate of return)
The level of risk (rate of risk)
supplies the amount of funds that will be in investasiikan
i: interest in the bank
E: expected

i <E = capital market

i> E = Deposits

2. Analysis
In this stage investors conducted an analysis of the effects / group effect. One purpose of this
option is to identify the same effect (miss priced) if the price is too high / too low
For that there are two approaches that can be used:
A. Fundamental Approach
This approach is based on the information published by the issuer or by an
administrator exchanges. Because the performance of listed companies is influenced
by the industrial sector where the damage is in the Macro economy, then to
estimate the prospects of its stock price in the future insolence in associate with
faktor2x fundamentals that influence. So this analysis at the start of a cycle of
corporations in general, further to the industrial sector, is finally done and the
performance evaluation of its shares in issue (Him).
B. Technical Approach
This approach is based on the data (change) stock price in the future and this analysis
is the analysis estimates that the shift of supply (supply) and demand (demand) in
the short term. And they tried to tend to ignore the risk and profit growth in the
barometer shows of supply and demand. This analysis is easier and faster in
comparison to the fundamental analysis, how shares this analysis does not assume
that the fundamental analysis is too complicated and too much based on the issuer's
financial statements.
3. FORMING PORTFOLIO
In this stage, identification of the effects of which will be selected and what proportion of the
funds will be invested in each of these securities. effects in order to select the portfolio
formation is the effect of having the effect of a negative correlation coefficient (having
opposite relationship). This is done because it can lower the risk (do not let the eggs in one
bed)
Evaluating Portfolio Performance