PORTALJABAR, BANDUNG CITY - The capital market is a place for investors to grow their wealth through various investment instruments. For beginners, understanding the main instruments such as stocks, bonds, mutual funds, and derivatives is very important before starting to invest. Especially understanding the potential profits and risks of each investment product.

The most popular investment instrument or product in the capital market and storage at the Indonesia Stock Exchange (IDX) is stocks. Stocks are proof of ownership of a company. By purchasing stocks, investors become partial owners of the company and are entitled to the profits generated.

According to the Head of the West Java BEI Representative Office, Achmad Dirgantara, there are three potential benefits of being a shareholder, namely being able to get capital gains, or profits from the difference between the purchase price and the selling price of shares. Then being able to get dividends, namely the distribution of company profits to shareholders. And having the right to vote to participate in company decisions through the General Meeting of Shareholders (GMS).

"Meanwhile, the first risk of stock investment is price fluctuation. Stock prices can rise and fall rapidly due to various factors, both domestic and global economic conditions and the company's financial performance," said Achmad, Friday (7/2/2025).

Second, liquidity risk. Not all stocks are easy to resell at the desired price. And third, company risk, if the company experiences losses or goes bankrupt, investors can lose their capital.

The second product traded on the IDX is bonds or debt securities, either issued by the government or companies to raise funds from investors. Investors who buy bonds will receive periodic interest payments (coupons) and a return of the principal investment in the fall.

The advantage of bonds is that they provide a fixed income in the form of bond coupons issued periodically, thus providing a stable income. Including instruments that have higher security, especially in government bonds, because they are guaranteed by the state. So it has a lower risk than stocks. Having bonds or government debt securities can be used as a means of diversifying a portfolio to reduce risk in investment.

"However, investment in bond instruments still has risks. First, interest rate risk, if interest rates rise, bond prices tend to fall. Second, default risk, if the bond issuer experiences financial difficulties, coupon and principal payments can be hampered. Third, liquidity risk, because not all bonds are easily traded in the secondary market," he explained.

The next instrument according to Achmad that is easier for beginner investors is mutual funds. Mutual funds are investment products managed by investment managers. Unit purchase funds from various investors are collected and invested in various instruments such as stocks, bonds, or money markets by investment managers who become mutual fund managers.

The advantage of mutual funds managed professionally is that investment managers are experienced in managing funds, making them suitable for beginners. Automatically, investment funds managed by investment managers are diversified, thus reducing risk because funds are stored in various instruments. And the most important thing is accessibility for the general public because they can start investing in the capital market with small capital.

Regarding the risk of mutual funds, the first is market risk. The investment value in the form of unit prices can go up or down depending on market conditions. Second, there are management costs in the form of administration and management costs that can reduce profits. Third, dependence on investment managers, because investment performance depends on the expertise of the investment manager chosen by the investor.

In addition, what is also in the capital market and trading on the IDX is derivative products. Derivatives are financial instruments that depend on underlying assets such as stocks, bonds, or commodities. On the IDX, some derivative products that are marketed include futures and stock options.

The advantage of derivative products is in leverage. Investors can get greater exposure with smaller capital. Then for investors who are advanced or understand investment, they can use derivative instruments as a hedging facility, namely to protect the portfolio from the risk of price thickness. This product also has high profit potential, if invested with the right strategy.

However, Achmad invited investors to be aware of the risks of derivative products, namely first, leverage risk. Because it uses margin, the potential loss can also be greater than the initial investment. Second, complexity because it requires a deeper understanding than stocks or bonds. Third, liquidity risk, because not all derivative contracts have high liquidity in the market.

"By understanding the products or various investment instruments available in the capital market, investors can choose investment instruments according to their respective financial goals, risk profiles, and investment timeframes," explained Achmad.

“Stocks offer high profit potential but also have high risks, bonds provide fixed income but have interest rate and default risks,” he added.

While mutual funds are an easier choice for beginners because they are professionally managed. While derivative products are only for investors who really understand investment strategies. Before investing, make sure to understand the risks involved and conduct an in-depth analysis so that investment decisions are wiser. (rep no)