Minimal risk, safe, transparent, and easy access are some of the things that are synonymous with Mutual Funds investment. This is also the reason why Mutual Fund investments are currently preferred by many.
In addition, the types of Mutual Funds are quite diverse, ranging from Money Market Mutual Funds, Equity Mutual Funds, Balanced Mutual Funds, and Fixed Income Mutual Funds. All investment options offered by these Mutual Funds should be used by investors to save funds for future financial goals.
Unfortunately, not all investors have the right mindset to buy and manage Mutual Funds. There are several mindsets that investors need to avoid, what are they?
5 Mindsets to Avoid When Investing in Mutual Funds
An investor’s way of thinking has a big influence on the profits obtained. For example, investors who underestimate the analysis of Money Market Mutual Funds products. The reason is that this type of Mutual Funds allocates funds to money market instruments which are known to have a low level of risk.
This underestimating mindset is also based on investor confidence in the stable yield given because the value of the instrument is not volatile. Unfortunately, this mindset can backfire, because investors may become less careful in choosing products.
The lack of analysis or even no analysis at all will actually plunge investors into risks that were originally small-scale. You can experience risks such as default by the publisher because the product was not reliable from the start.
There may even be a closure by the Financial Services Authority because the selected Money Market Mutual Funds product is considered to perform below the minimum threshold. So, this is an example of a mindset that investors shouldn't have.
If you want to minimize risk when investing in Mutual Funds, you should avoid the following five mindsets.
1. Monitor Investments Every Day
Monitoring investment portfolio is an important agenda for investors. Many investors even monitor and ensure that the movement is in a positive direction daily. Unfortunately monitoring too often especially every day is not the right step.
Daily monitoring has no benefit, in fact, it might lead you to take impulsive steps. For example, selling a product or diverting it to a small profit.
This monitoring should be carried out based on the goal, investment plan, and timeframe. For example, in Money Market Mutual Funds which portfolio matures in less than a year, you only need to monitor every two or three months.
2. Investing Leads to Instant Riches
Do you still think that investment will make you rich in a short time? Be careful, this mindset can plunge you into making the wrong decisions. For example, you are tempted by Mutual Funds that offer high returns even though they do not match your risk profile.
Keep in mind that investing does not necessarily bring wealth in a short time. It takes time, analysis, and consistency in investing which finally pays off. Even with a stable Money Market Mutual Funds return, you can still generate maximum profits.
So return to what kind of risk profile you have and choose which type of Mutual Funds is suitable.
3. Invest All Funds in One Instrument
Talking about the risk profile, you might think that you are currently the conservative type. Therefore, you spend all your funds on one Mutual Funds investment instrument that has minimal risk with the hope that when conditions are good, the profits obtained are even better.
The instrument indeed has minimal risk, but if you spend all your funds in one instrument, the risk becomes higher. If the selected instrument fails to pay then all your funds will be forfeited. So this mindset must be avoided.
It is better to apply a fund diversification system to two or three types of Mutual Funds. This method will be safer, because if one instrument falls, other assets can still cover it.
4. Waiting for the Right Investment Time
The mindset about the right investment time is also often found in some investors. Waiting when the Mutual Funds value drops or waiting when certain targeted products start selling their shares. Always waiting for the moment will actually make you delay investment activities.
The more you procrastinate, the later you can seize the opportunities. There is no right time to invest because basically you can start right away once you know what the goal is.
Whether you want to raise an emergency fund, buy a new car, prepare a down payment to buy a house, and more. Once you know, you can immediately start investing.
5. Invest out of FOMO
Fear of Missing Out or FOMO can also be the wrong mindset in Mutual Funds investment. You may take the impulsive action of investing in long-term Mutual Funds because all your friends have done it. However, everyone's goal of investing is different.
Without a clear goal, you end up choosing the wrong type of investment. Even though you may be a conservative type of investor who is more suited to short-term Mutual Funds investments.
This early error can affect product selection, investment analysis, and finally the expected return. That’s why you should properly identify what your investment goals are when starting out, not choosing a new investment to determine your goals.
Where is the Right Place to Invest in Money Market Mutual Funds?
You may have set investment goals, risk profile, and finally your choice falls on Money Market Mutual Funds. The main reason is because the stable potential return of Money Market Mutual Funds and suit your conservative risk profile.
Next is to determine where you should invest. Those of you who want to gain a wealth of conveniences can choose DBS Treasures priority banking. You can immediately gain the benefits below.
1. Professional Fund Management
Not having time to manage investment funds is no big deal if you are a priority banking Client of DBS Treasures. All management of investor funds will be carried out by the Investment Manager.
The Investment Managers who partner with DBS Treasures are professional and experienced. You as an investor can gain peace of mind and feel comfortable to hand over the management of investment funds to the right Investment Manager.
2. Gaining Insights as an Investment Guide
Investors who do not have much time also have difficulty in accessing investment knowledge. This time constraint is no longer an obstacle, because DBS Treasures' team of financial experts will support you.
Knowledge of investment will be communicated regularly in the form of market analysis and the latest opportunities that have been tailored to your aspirations and needs. You can confidently and easily make decisions about buying, selling and switching products.
3. Less Risk with Diversification
In the third mindset, you are advised to diversify. You don't have to worry about this, because at DBS Treasures your investments can be diversified.
The result is of course your portfolio will face less risk, avoiding risk means that the opportunity for the asset to work more optimally will be even higher.
4. Easier Investment Transactions
Investment in DBS Treasures does not require you to come to the nearest branch office. All transaction access is much easier because you can do it from a smartphone via the digibank by DBS Application.
What transactions can be made? Starting from selling, buying, and switching investment products. You can also carry out an analysis process supported by the data from Infovesta. This includes making SID (Single Investor Identification) from KSEI (Indonesian Central Securities Depository) for those of you who don't have one.
After understanding these five wrong mindsets in investing, which mindset do you still have? Do you think that investing can make you rich in no time? Or are you still convinced that investment funds should only be used in one type of investment?
It's better to start changing that mindset because it can lead to failure. Even after you choose a Money Market Mutual Funds which is known for its low risk and stable return potential. It still takes the right mindset so that profits are more optimal.
You can trust DBS Treasures to manage your investment funds effectively. Moreover, clearly there are many benefits to gain after joining DBS Treasures.
No need to delay investing anymore if you have prepared your goals and funds. Get started with DBS Treasures right away.
