SAVING AND

INVESTING
ACTIVITY 1:
THE IMPACT OF TIME ON MONEY
In this activity, students will obtain understanding from the lecturers on the time
value on money and the advantages of saving money while young. A good way to
save money is by investing because when you invest, you get a certain percentage
of returns on investment (ROI).
EXAMPLE

• This year, you spent Rp 1,000,000 on investments. Let’s say you get a 5% ROI. Next year,
you would automatically earn Rp 50,000 (5% of Rp 1,000,000), which adds up to Rp
1,050,000. The following year, you would earn Rp 52,500 (5% of Rp 1,050,000) from your
previous annual savings, which adds up to Rp 1,102,500. Every year, the amount of returns
increase and your money grows.

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

1,000,000 1,050,000 1,102,500 1,157,625 1,215,506 1,276,282
NOW, LET’S TRY AN EXAMPLE WITH BIGGER NUMBERS
AND A LONGER PERIOD OF TIME.

Age of Investing &

Total Amount Saved at
Annual Investments ROI
Investment Age 65
22-30 (9 years) 31-65 (35 years)
Andy Rp 2,000,000 Rp 0 Rp 18,000,000 9% Rp 579,471,000
Budi Rp 0 Rp 2,000,000 Rp 70,000,000 9% Rp 470,249,000

Andy started investing at age 22 with an amount of Rp 2,000,000/year for 9 consecutive

years, stopping at age 30. Budi started investing at age 31 with the same amount of money
per year until the age 65, taking a time span of 35 years. With the same ROI percentage,
Andy’s savings at age 65 are higher than Budi’s because Andy started receiving returns
earlier even though his investments weren’t as substantial.
DISCUSSION

Through both examples, it’s expected that students can grasp the idea that it’s smart to
start investing at a young age to boost the amount of savings, which may help achieve
financial goals and lead to future financial flexibility
ACTIVITY 2: SAVING STRATEGIES

In this activity, students will learn how to build a good savings habit and
understand a few strategies that can help reach savings goals. Every individual may
have their own comfortable way in managing finances, so the lecturers will explain
a few strategy alternatives and share what works for them personally
STRATEGY 1

1. Mental accounting. It helps when the mind can identify categories of where income and
savings are going to be distributed. These distribution categories can be divided into
three hypothetical savings buckets, for example:
a. Daily expenses, a bucket for regular expenses that needs easy access for food, transportation,
etc.
b. Special savings, a bucket for large, long-term expenses such as tuition, rent, and special goals.
c. Emergency savings, a bucket for the unexpected expenses.

2. These three buckets can be considered as three different bank/savings accounts.

STRATEGY 2

Create a spending plan/budget that divide components of income and expenses. Be sure to
include savings.A template designed for college students is attached along this document
STRATEGY 3

Keep track of every single expense made during a period of time by writing them down.
Implementing this strategy your whole life might become overwhelming after a certain
amount of time, therefore one month to six weeks will be enough to perceive your habits
in where you spend money most and is it going where you want it to go. Taking notes on
your phone, or using an application can easily do this strategy. There are several applications
that offer this service.
DISCUSSION:

• Where else can we find money to save? People often say, “I don’t have money laying around
for me to save.”
One way to save money in this type of situation is to evaluate habits. Identify any small spending that
happen often – they add up. For example, you can’t go a day without having a cup of coffee before
class. Instead of spending Rp 18,000 every morning at a coffee shop, wouldn’t you rather make your
own coffee at home? If you keep up that habit of spending Rp 18,000 everyday, you’ll be spending Rp
540,000 a month and Rp 6,480,000 a year. Do you think it’s worth it?

• In order to have savings, all you need to do is start, even from a small amount. If you’re
persistent in saving a small amount regularly, they will still add up! Build a savings habit.
ACTIVITY 3: BARRIERS TO SAVING

In a realistic world, there are always barriers and unpredictable situations. This
section allows students to prepare and be aware – not to discourage, but to let
students react rationally when being faced with these certain situations.
COMPETING GOALS

• Short-term versus long-term desires – try to resist the daily desires and focus on your
future goals, maybe by putting them up on display on your room wall, refrigerator, or
mirror.
• Multiple long-term goals – it’s clearly a challenge to save up for multiple goals, but to sit
down, think them through, and be aware of your ambitions can help overcome this
barrier.
EMOTIONAL SPENDING

• When some people are stressed or tired, they tend to start spending money outside of
their goals.This can defeat saving goals, so be aware of what your feeling.
DECISION FATIGUE

• Low mental energy leads to poor financial decisions. When someone has made multiple
decisions they tend to run out of mental energy for making more decisions, which may
lead to bad decisions and impulse purchases. These situations may happen when you’re
out to buy a car. You already know what type of car you want, but when you get to the
dealers, they offer you more options for you to decide upon that may obscure what
you’ve already decided. Being aware of what you’re feeling may help you understand that
you need a break to think clearly before making any major decisions.
DEBT

• Being aware of the debt you have and what interests come with them may help stop debt
to pile up and the amount of interests you need to pay. That large amount of money may
interrupt your saving goals.
DISCUSSION:

A couple guides:
• So what barriers have you faced?
• Have they been stopping you from saving up?
INVESTING
Actually,The Best Investment Comes from Our Own Analysis, so We Need to Learn It
WHAT NEED TO LEARN?

FINANCIAL INVESTMENT NON-FINANCIAL INVESTMENT

1. Investment Products 1. Health
2. The Characteristics of 2. Education
InvestmentProducts 3. Relationship
3. Grow the Investment Based on the 4. etc
Risk Profile
INVESTMENT PRODUCTS

1. Gold
2. Mutual Fund
3. Stock
4. Property
5. P2P Lending
6. Government Bond
GOLD
MUTUAL FUND

• A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other assets.
• Mutual funds are operated by professional money managers, who allocate the fund's assets and
attempt to produce capital gains or income for the fund's investors.
• A mutual fund's portfolio is structured and maintained to match the investment objectives stated
in its prospectus.
STOCK
PROPERTY
P2P LENDING

Peer-to-peer lending, also abbreviated as P2P lending, is the practice

of lending money to individuals or businesses through online services that match
lenders with borrowers. Peer-to-peer lending companies often offer their services
online, and attempt to operate with lower overhead and provide their services more
cheaply than traditional financial institutions.

CREDIT RISK:
Peer-to-peer lending also attracts
borrowers who, because of their credit
status or the lack thereof, are unqualified
for traditional bank loans.
GOVERNMENT BOND

A government bond is a debt security issued by a government to support government spending and
obligations. Government bonds can pay periodic interest payments called coupon
payments. Government bonds issued by national governments are often considered low-risk
investments since the issuing government backs them.
THE CHARACTERISTICS OF
INVESTMENT PRODUCTS
CHARACTERISTIC OF INVESTMENT PRODUCTS
GROW THE INVESTMENT
BASED ON THE RISK PROFILE
GROW THE INVESTMENT:
LOW RISK (EXAMPLE - STOCK SAVING)
GROW THE INVESTMENT:
HIGH RISK (EXAMPLE - STOCK TRADING)
HIGH RISK (EXAMPLE - STOCK TRADING)