Money Market Mutual Funds are currently one of the popular types of investment. However, some are still confused about how Money Market Mutual Funds work. Therefore, it would be better if you fully understand the investment process to make a profit.
The reason is that all investment activities, apart from focusing on the profits you get, also requires understanding the risks that may occur when you do it. Therefore, to balance or even minimize future risks, you need to know how to choose the right Money Market Mutual Funds .
This will be very useful for you later during analysis, fund management, to calculating the potential returns. Make sure you don’t rush the selection process, in order to find the most suitable strategy.
Here's How to Choose Money Market Mutual Funds Products to Gain Profits Choosing Money Market Mutual Funds investment is the right decision. This investment is considered to have minimal risk but offers various benefits.
But before discussing the benefits, it's better to first understand how Money Market Mutual Funds work and tips on choosing the suitable product.
Determine Investment Goals and Risk Profile
The first thing you must determine before starting to invest in Money Market Mutual Funds is to determine your investment goals and risk profile. Assessments related to risk profiles can be concluded by each investor. Because this will depend on the character or personality of the investor.
The choice of various investment products often makes investors confused about which instrument to invest in. Because in addition to the investment benefits, investors must also be ready to accept the risks.
For investors who have a conservative character or risk profile, as well as for those who are looking for investment products for short-term goals with a period of less than one year, for example, Money Market Mutual Funds will be very suitable option.
Read the Prospectus Thoroughly
Although in Money Market Mutual Funds the fund management system is regulated directly by the Investment Manager, you can still analyse the prospectus to see whether it is clear and potentially profitable in the future.
You can read or understand complete information about this investment. Starting from fund management, track record, to the liquidity of the Mutual Funds.
Some important information stated in the prospectus that investors must understand include the license from the Financial Services Authority (OJK). In addition, investors also need to ensure the track record of the Investment Manager, track record of the Custodian Bank, and the method of calculating NAV or Net Asset Value.
Choosing the Right Investment Manager
Fund management in Money Market Mutual Funds investment is carried out by the Investment Manager. However, each Investment Manager company has their own way of working and policies.
This means that you will entrust the funds you have to be managed by other parties. Just like entrusting goods, when you’re entrusting your money, naturally you must know who is managing the Money Market Mutual Funds for you.
Therefore, finding out about the performance of the Investment Manager is a mandatory thing that must be done if you want optimal investment returns.
With the available conveniences and disclosure of information, it will be easy for you to know which Investment Manager is the right one.
Amount of Asset Under Management In addition to the points above, knowing the amount of asset under management is an important thing to consider when choosing a Money Market Mutual Funds. The reason is, Asset Under Management (AUM) is one of the indications of public confidence in terms of the managed investment capital.
The growth factor of managed funds is an important assessment for several investors. This factor is used to predict the growth of returns at a certain time during the investment.
In addition, the value of the investment composition should not be missed. Because some Mutual Funds sometimes exceed the composition limit, although not many.
Know the Details of Fees Charged
When investing in Mutual Funds, we cannot simply pay attention to the return or yield, but also the costs that come with the product.
Likewise with Money Market Mutual Funds investments, fund management is carried out by the Investment Manager. You are entrusting the funds you have to be taken care of by someone else. Such services come with certain fees.
The fee that you must pay to the Investment Manager is commonly referred to as management fee. The amount of fees for each company can be different. So, you have to find out first in details of the profit sharing system.
Apart from management fees, Mutual Funds also include other general fees charged to investors such as subscription fees, switching fees and redemption fees.
The list of fees above can be found in the fund factsheet of each Mutual Fund. Maybe these costs are not too big, but they also need to be considered if they can affect the growth of your investment funds in the long term.How Money Market Mutual Funds Work Here's how the Money Market Mutual Funds work, which you can read and understand before starting to invest:
Investors deposit funds to the Investment Manager
Before deciding to invest in a Money Market Mutual Funds, you must first know how it works. First, related to the funds you use in investment.
Investors deposit funds according to their budget. Here the task of the Investment Manager is to manage funds from investors who want to buy assets with a specific purpose.
Investment Manager creates portfolio
After all funds are received by the Investment Manager, the portfolio will be created. Usually this is done collectively after a certain amount of funds has been collected.
Draft portfolio containing valuable assets
The portfolio created by the Investment Manager contains valuable assets that you purchase in the form of Money Market Mutual Funds. Usually the contents of a Money Market Mutual Funds portfolio are Bank Indonesia certificates (SBI), bonds with certain maturity period, or fixed deposits.
Portfolio management by the Investment Manager
After the portfolio creation is complete, Investment Manager will manage the investment in order to gain optimal returns.
Although it looks simple, this portfolio must be managed carefully. Therefore, the selection of an Investment Manager needs to be done carefully starting from performance, track record, and so on.
Periodic reports to investors
In the process of investing in Money Market Mutual Funds, investors will receive periodic reports. This is provided as information for investors regarding the use of funds that have been issued for investment. Usually, this report shows the progress and performance of investments that have been carried out over a certain period.
Advantages of Choosing Money Market Mutual Funds Investment Now that you know how Money Market Mutual Funds work, you can understand what the advantages are:
Potentially Profitable
Every investor certainly wants profit when choosing a Money Market Mutual Funds investment . The first advantage that you can gain after investing in Money Market Mutual Funds is the potential return that can be equal to or slightly higher than the Fixed Deposit interest depending on market conditions.
You can now calculate the range of profits you will gain from the funds you have deposited. However, this profit also depends on the condition of the money market.
Can Be Done with Flexible Capital
Second, you can invest in Mutual Funds with a budget according to your preferences. However, the more capital you deposit, the greater your potential profit will be.
Especially if you do it for a long-term investment. The prospect of this investment has a record of periodic increases. So, although it can be done with minimal capital, if you want to get more profit in long-term prospects, it's best to invest a larger amount.
Can be Redeemed Anytime
Another advantage that you can gain by investing in Money Market Mutual Funds is the convenience of withdrawing funds at any time. This type of investment is different from Fixed Deposits where you will be subject to a fine if the capital withdrawal is made before maturity.
Although later you will be charged a fee if your bank is different from the custodian bank (the bank that transfers the proceeds from the sale of Mutual Funds). However, the fee is small. So, you will not experience excessive losses at the time of urgency that requires you to withdraw money.
Not Subject to Tax
Why are Money Market Mutual Funds a more profitable investment choice? Because you will not be taxed as they are not tax objects. This is certainly different from other types of investment such as Fixed Deposits.
Choose Money Market Mutual Funds Investment with DBS Treasures If you are still confused in choosing an investment partner with the right fund management, no need to worry, because you can rest assured investing in Money Market Mutual Funds at DBS Treasures priority banking ("DBS Treasures"). You will gain several benefits including:
All your investments will be managed by the professionals
This will make it easier for you to focus on work or daily activities. It is enough to entrust funds to be managed properly and optimally by a reputable Investment Manager in partnership with DBS Treasures, with a record of optimal and productive performance.
You can gain more insight from the team of experts
DBS Treasures facilitates you with a team of financial experts who are reliable and proactive in communicating information and market analysis and opportunities that have been tailored to your profile and preferences.
Diversification
You can also reduce risk because the investment process is carried out with a diversification system. The spread of funds will be divided into several investment assets to make it more optimal and the risks can be minimized.
Multiple Transactions in digibank by DBS Application
You can access various investment transactions with ease through the digibank by DBS Application. You can make Mutual Funds sales, purchases as well as switching products with one application. For those of you who don't have a Single Investor Identification (SID) as the main requirement for investing in Mutual Funds, you can also make one easily in this application.
The requirements are you need to become a Client of DBS Treasures with a minimum deposit of IDR 500 million and have the digibank by DBS Application, e-KTP, and NPWP.
