Tuesday, March 12, 2019

The Importance of Having a Reserve Fund

The Importance of Having a Reserve Fund

The Importance of Having a Reserve Fund - You do not need to be ashamed if you feel afraid to invest because they do not want to lose your money. No matter how often you hear the slogans of investment says that every investment must be at risk. The higher the risk the higher the returnnya, and vice versa. It’s okay if you’re afraid of losing your money, because we must still ensure the existence of a number of our cash assets safely. But keep it under my pillow just to avoid the risk of investment is not the best way, because a lot better place to store your money.

Every time I hear the word investment may often that comes to mind is the bulls and the bears. This term is indeed sounds like a very handsome animal name he uses. The bulls, like the meaning in the Indonesian language is a bison. Bull horn protruding upward is used to describe a market situation which is being excited or ride. As for the bears or a bear, I bear a bow to the ground when walking, so often used to describe situations in which markets are down or lethargic. Naha € | if the bulls and the bears are 2 terms that are very popular in the investment in capital markets, then in individual and family financial planning for show earlier behavior should be balanced by a longer term of the Chickens or the chicken.

If you notice movement of a chicken that looked very penakutnya, then you try standing about 2 feet away, then suddenly you stomp feet loudly and immediately the cock must have ran. If you feel like the chicken when investing, and choose extra cautious than courageous but can die like the buffalo or bear, it does not mean you are a coward. Because it is important to act like the chicken to a number of our money, because money had to be there within your grasp, should not be lost should not diminish in value, stored in a safe and high liquidity. This is what I mean by chicken alias reserve fund money. Some money We canĂ¢ € ™ t afford to lose.

Imagine if all your money runs out on traded stocks, invested in property, used for business for the results, buy the dollar, high-interest loan. At any time you need some cash in the amount large enough for unexpected needs, might not be available funds. Because it would be difficult to withdraw your money if you are already used for business capital, also requires a long process to convert the home into cash, even likely that the numbers could be reduced because the selling price is much lower than the purchase price, such as risks that can occur in equity and dollars.

The next question is what kind of unexpected needs that require some immediate cash? We already know that life does not always run smoothly, just not smooth with the same budget that we have planned but difficult in implementation. Because of that reserve fund is needed to anticipate the conditions as follows:

1. Various calamities that can cause financial loss can occur without predictable when it will be incurred. Calamity-disaster like illness, car accidents, fires in the home, death are events that often can force you to spend some cash in the amount of a sudden large enough. Semisalnyapun you have cover financial losses resulting from the disaster by taking insurance, are nevertheless a number of cash funds should be available. The cost of treatment and hospitalization at the hospital, pay the cost of car repairs, home repair by fire, or to pay funeral expenses, usually must be paid first in front. These payments often can not be delayed until the process of reimbursement or insurance claims and administration is complete.

2. Is unpleasant to our employees could lose jobs due to Termination of Employment or layoffs. Unfortunately, layoffs can happen to anyone, not even you. Maybe you will get a severance, but only enough for a few months, when looking for a job is not easy. If they have to severance, otherwise the situation could become even more complicated. If you are an entrepreneur, then you surely know that the business could go bankrupt and stopped operating income. To deal with this situation will require a cash reserve fund that can meet the family expenses for not getting back income

3. The emergence of unplanned expenses such as gifts, donations, holiday, or spending that occasionally occur and are not routine. This expenditure is often too unpredictable when it will be incurred. The problem of our income is usually spent on routine expenditures and can rarely be reserved for non-routine expenditures. With the reserve fund is non-routine expenses can be paid without having to disturb the monthly budget.

No matter whether your financial condition is stable with good career and high salary, whether you’ve entered the age of retirement, or if you are young and just starting a career, then whoever you are and however your current financial situation. You should still have some reserve funds. Aim to establish a reserve fund is so that you do not trouble to finance expenditures that are emergency or emergency, fund family expenditure if the family income stopped suddenly because of layoffs, and pay other expenses are not routine.

Where to save the amount of Reserve Fund and How?

Reserve fund should be kept in a secure, easy to take and will not make and lose principal value of an investment. For example, such as savings deposits, time deposits, money market funds, government bonds, certificates of Bank Indonesia, however, with interest rates continue to fall, people are often tempted to place this reserve fund into high-risk investments, that is why people find it difficult to form fund reserve. Here are some factors that should dipertimbangakan in choosing the right investment product for your reserve fund:

1. Notice period of time. Keep your backup fund investing only in the short term of course, choose investment products that are specifically diranacang separately short-term investments at most one year. Because once you invest in products invesatsi more than one year, then you reserve fund will be affected market risk. For example if you buy bonds with maturities of 3 years with a coupon rate of 7%, it turns out ditahun into two interest-rate bond market raat megalami rise to 9%, a result you lose 2%. If you want to sell it may be didiscount, because people would prefer bonds with higher interest rates,

2. Consider the credit risks, Savings, deposits, SBI, and government bonds within 3 months, had the highest risk of default is low or better than securities issued by a private Oriented Seang problematic both in the form of commercial paper and bonds with maturities the same. They usually promise interest rates higher, but the risk is also higher,

3. Notice the fees and charges. Saving money in the bank may be the lowest administrative cost, but must be taken into account his tax cut. Money market funds and other money market products are usually also charge a purchase, resale, managemet fee. The lower cost is certainly the better because it will not reduce the investment return is too much.

4. The amount of reserve funds should not be too small also not too big. The ideal number is 6 times the monthly expenses of your family. If your job or your income is not stable then you should set the amount of reserve funds the greater the instance 12 times your monthly household expenditures. A time when the funds are used up then fill it back up again until the target is reached, after the target is reached stop. And so on

Investing to establish a reserve fund, is not very interesting, because it does not make you rich, but also does not make you poor. Investments in the minimum reserve fund will not make you lose principal value of your investment, but at least the growth in reserve funds could match inflation, even at times may also be above inflation. What is certain investments in the reserve fund does not make you have difficulty sleeping. Remember! special reserve fund, the investment return is not important but how we can return to savings intact.