The Trick to Control Capital Market Risk

Capital Market Risk

Speaking of the economy today is familiar. There are many questions that spur the economic situation, both in terms of the economic system, the level of the economy, to the impact that occurs due to the economy.

An unstable economy results in problems in an activity, both external and internal factors. Spending levels that exceed income will have a high risk impact on the community.

The impact of economic problems also occurs due to inflation. Inflation is the continuous increase in the price of goods and over a period of time. It means that when public spending increases but the value of goods prices soars compared to the expenditure obtained.

One effective way to reduce spending in the economy is to use capital market products. So, what does the capital market have on the economy? And how to set so as not to risk in the capital market?.

According to Capital Market Law No.8 In 1995 the Capital Market was an activity related to public offerings and securities trading, public companies related to securities. Securities are securities, i.e. bonds, commercial securities, stocks, bonds, proof of debt, collective investment units, futures contracts on securities, and any derivatives of securities. One way to reduce the deficit of the economy is by investing in the capital market.

In every transaction against the economy, on the other hand there is definitely a risk of problems occurring. Investing in the capital market is very profitable, but it is likely to suffer losses. Capital markets mean money markets.

Capital Market Risk

Risks of investing in the capital market:

  1. Market risk, this risk is due to fluctuations in the value of securities so capital loss.
  2. Individual risks, arising on a type of investment, have no effect on market changes.
  3. Risk of reinvestment, interest does not match predictions.
  4. Risk of inflation, high inflation rate compared to creditor interest rate towards debtors.
  5. Currency risk, change in currency exchange rate.
  6. The risk of default, the debtor is unable to pay the obligations of the agreement.
  7. Political risks, changes in legislation.
  8. Marketability, investment instruments are difficult to sell before maturity then liquid funds will be difficult.

From the 8 economic risks in the capital market that occur when investing each will appear losses tehadap investors if not careful in investing it. The advantage of investing in the capital market because it is also seen as a long term compared to just saving ordinary.

The right tricks as a way to control risk in the capital market include:

  1. By diversifying (dividing investment capital into several types of existing assets),
  2. Choose an investment asset that you know (choose the type of investment that is already legal and has permission from the OJK (Otoritas Jasa Keuangan) or that you understand),
  3. Can choose savings investment (because savings have a small risk and can be disbursed at any time when needed).
  4. Learn the basic science of investing (learn how to manage investments well, learn the risks that can occur).

In addition, investment strategies in the capital market are also required for investors to gain capital gains as well as good performance, such as collecting several types of investments / stocks in one portfolio, buying in the initial market and sold after the shares are listed on the exchange, buy and store when investors have confidence to grow, buy sleeping stocks (stocks that rarely or never have transactions, it can be due to a small number of shares or poor performance), the strategy of moving from one stock to another other stocks, concentrating on certain types of investments, mutual funds are suitable for investors who do not have enough time in investing.

Also Read : Risks and Advantages of Forex Trading

Indeed investing in the capital market can increase the economy quite large and generate profits, but if the way of investment is wrong and not appropriate then it will pose a risk of problems that cause losses (capital loss). Be careful in investing, and be wise in choosing investments.

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