1. What Are Stocks and Why Do They Matter?
Stocks represent ownership in a company. When you buy a stock, you’re essentially purchasing a small piece of that company. If the company performs well and earns profits, you can also benefit through dividends or capital gains (the increase in stock price).
Stock investing is one of the most popular ways to build wealth because of its high potential returns. However, it also comes with risks — which is why understanding the basics before investing is crucial.
2. Prepare Yourself Before Investing
Before you start buying stocks, there are several key things you should do first:
a. Set Your Investment Goals
Are you investing for the long term, for retirement, education, or short-term profit?
Your goals determine your investment strategy — whether it’s short-term trading or long-term investing.
b. Know Your Risk Profile
Everyone has a different tolerance for risk.
If you prefer stability, you might choose blue-chip stocks from large, established companies.
If you’re comfortable with higher risk and volatility, you might explore growth stocks or smaller companies.
c. Learn the Basics of the Stock Market
Familiarize yourself with key terms such as IDX (Indonesia Stock Exchange), dividend, capital gain, and cut loss.
This knowledge helps you navigate the market confidently and avoid costly mistakes.
3. Open a Brokerage and RDN Account
To buy and sell stocks, you need to open a securities account through a licensed brokerage firm registered with the OJK (Financial Services Authority) and IDX.
Here’s how:
• Choose a trusted brokerage (e.g., Mandiri Sekuritas, BCA Sekuritas, Ajaib, Bibit, IPOT, Mirae Asset).
• Fill out the online registration form.
• Upload your ID (KTP), tax number (NPWP), and bank details.
• Once approved, you’ll receive a Rekening Dana Nasabah (RDN) — a special account to hold your investment funds.
After activation, deposit your funds and you can start investing through the broker’s trading app.
4. How to Choose the Right Stocks
Picking the right stocks requires analysis — not guesswork.
There are two main approaches:
a. Fundamental Analysis
This approach looks at the company’s financial health and long-term value.
Important metrics include:
• PER (Price-to-Earnings Ratio)
• PBV (Price-to-Book Value)
• ROE (Return on Equity)
• Debt-to-Equity Ratio (DER)
• Revenue and profit growth
Fundamental investors usually buy companies with strong balance sheets and consistent profits.
b. Technical Analysis
This approach studies stock price charts and patterns to predict future movements.
It’s often used by traders who seek short-term opportunities.
5. Choose Your Investment Strategy
Different investors have different styles. The most common include:
• Value Investing → Buying undervalued stocks trading below their fair value.
• Growth Investing → Focusing on fast-growing companies with high potential.
• Dividend Investing → Investing in companies that regularly pay high dividends.
• Trading → Buying and selling stocks frequently to capture short-term gains.
Pick the one that fits your goals and personality.
6. Start Small
You don’t need millions to start investing in stocks.
In Indonesia, the minimum purchase is 1 lot = 100 shares.
For example, if PT Telkom Indonesia (TLKM) is priced at Rp3,500 per share, one lot costs Rp350,000 — very affordable for beginners.
Start small, learn the process, and grow your confidence before investing larger amounts.
7. Diversify Your Portfolio
Never put all your money into one stock or one sector.
Diversification helps reduce risk.
Example of allocation:
• 40% banking sector
• 30% consumer goods
• 20% energy
• 10% technology
If one sector performs poorly, others can help balance your portfolio.
8. Monitor and Review Regularly
Stock prices fluctuate daily — don’t panic over short-term drops.
Review your portfolio every 3–6 months.
If a company’s fundamentals weaken or no longer align with your goals, it’s okay to cut loss and reallocate funds.
9. Beware of Hype and Herd Mentality
Many beginners lose money because they follow trends blindly — buying because “everyone else is buying.”
Remember: there’s no guaranteed profit in stocks.
Always do your own research, trust data over rumors, and think long-term.
10. Keep Learning
The stock market evolves constantly.
Attend seminars, read financial news, and follow the IDX and OJK’s educational programs.
The IDX Stock Market School (Sekolah Pasar Modal) offers free classes for beginners — a great place to start.
Conclusion
Investing in stocks isn’t gambling — it’s a long-term strategy to build wealth.
The keys to success are:
• Knowledge,
• Patience, and
• Discipline.
By understanding the fundamentals, choosing the right stocks, and managing risks wisely, anyone — including you — can succeed in the stock market.