Note: This article discusses Indonesian financial products and regulations. The underlying investment principles apply globally, though specific regulatory bodies and historical examples vary by country.

Fear of Investing — It’s Normal, But Don’t Let It Stop You

Are you afraid to invest? That’s normal. In fact, if you live in Indonesia, that fear is very understandable. This country has a long history of investment scams that have traumatized many people.

But this article will show you one important thing: the biggest risk isn’t investing — the biggest risk is not investing at all.

Fear #1: “My Money Will Disappear”

This is the most common fear. And it’s not irrational — the stock market can indeed drop. The JCI (IHSG — Jakarta Composite Index) fell 50% during the 2008 crisis. The COVID-19 pandemic in March 2020 caused the JCI to plunge 35% within weeks. Read more about stock market risks.

But here’s what’s rarely told:

The JCI always recovers. Always. Since its inception in 1983, the JCI has risen from ~100 to ~7,000+ — a 70x increase despite going through multiple crises.¹

Investors who panicked and sold during crises did lose money. But investors who held and kept investing regularly always got positive returns in the long term (10+ years).

Long-Term JCI Returns

There is no 15-year period where the JCI delivered negative returns. Time is your best protection from volatility.

Fear #2: “Investing Is a Scam”

This is a very Indonesian fear. And unfortunately, there’s reason for it:

• Jouska (2020) — a financial planning company that was actually managing client money illegally and caused many people losses
• MeMiles (2019) — Ponzi scheme disguised as a walking app
• Pandawa Cooperative (2017) — billion-rupiah investment fraud
• GTIS (2013) — fake gold investment
• Hundreds of other cases reported by OJK every year

It’s reasonable for Indonesians to be skeptical. But there’s a fundamental difference between fraudulent and legitimate investments.

How to Distinguish Legitimate vs Fraudulent Investments

Golden rule: always check with OJK. Visit the OJK website or OJK mutual fund portal or call 157 to verify whether a product or company is officially registered.

All investment platforms we discuss on this site (Bibit, Bareksa, and IPOT, Ajaib, Stockbit) are registered and supervised by OJK. Your mutual fund assets are kept at a custodian bank separate from the investment management company — even if the company goes bankrupt, your money remains safe.

Fear #3: “I Don’t Understand Investing”

Good news: You don’t need to be an expert to start investing well.

Passive investing (index funds) is designed precisely for people who don’t have the time or expertise to analyze individual stocks. You simply:

1. Buy an index fund
2. Invest regularly every month
3. Don’t sell when the market drops
4. Wait 10-20 years

No need to read financial statements. No need for technical analysis. No need to know what candlestick patterns are. This strategy is simpler than cooking fried rice — and the results are proven to beat most “professional” investors.

Fear #4: “I Don’t Have Enough Capital Yet”

This might be the easiest concern to address:

Minimum mutual fund investment in Indonesia: IDR 10,000.

Ten thousand rupiah. Cheaper than a pack of cigarettes. Cheaper than a cup of coffee. Cheaper than an ojol (ride-hailing) fare.

You don’t need millions to start. Start with IDR 10,000, learn the process, feel how your portfolio fluctuates, then gradually increase the amount as you become more comfortable.

The biggest capital you need isn’t money — it’s the courage to begin.

The Biggest Risk: Not Investing

Now, let’s flip the perspective. What happens if you don’t invest at all and only rely on savings/deposits?

Simulation: IDR 2 million/month for 25 years

The difference between saving and investing: over IDR 2 billion more. From the same money — IDR 2 million per month. Learn more about inflation and why deposits aren’t enough.

This is the price of fear. Every year you delay investing, you lose potential growth that can never be regained.

Beware: Insurance Companies Exploit Your Fear

There’s an industry making trillions of rupiah from people’s fear of investing directly: insurance companies selling unit-link products.

The pitch sounds appealing: “Get protection and investment in one product!” They exploit your fear (“Investing alone is complicated, you could lose!”) to sell products that actually harm you in the long run.

Structural Problems with Unit-Link

Unit-link combines life insurance with mutual fund investment. It sounds practical, but there’s a fundamental conflict of interest:

1. Very high acquisition costs — Up to 100-200% of first-year premiums go to agent commissions and company expenses³
2. Very low investment allocation in early years — Sometimes only 20-30% of your premium is actually invested (the rest is fees)
3. Double management fees — Insurance costs + mutual fund fees + administrative fees
4. Hard to cancel — Surrender value is very low if canceled in the first 5-10 years (could lose 50-90%)

Real Example: 20-Year Comparison

Let’s compare unit-link with a separate strategy (term life insurance + index fund) assuming IDR 500,000/month premium/investment for 20 years:

Difference: IDR 150-180 million more with the separate strategy (100%+ larger!), plus higher life protection with cheaper premiums.⁴

Why Is the Difference So Large?

1. Upfront unit-link acquisition costs — Up to 200% of first-year premium taken as commission. Your money doesn’t work from day one.
2. Compound interest is damaged — With only 20-30% of premium invested in early years, you lose tens of millions in potential growth from compound interest.
3. Higher ongoing costs — Unit-link has insurance costs + investment management fees + administrative fees. Mutual funds only have expense ratios (~1-2% p.a.).
4. Unit-link mutual fund returns tend to underperform — Limited fund choices (only from insurance company affiliates) and higher internal costs.

Marketing Tactics That Exploit Fear

Insurance agents often use these tactics:

• ❌ “Investing alone is complicated and risky” → Yet buying an index fund on Bibit/Bareksa is as easy as buying phone credit.
• ❌ “If you get sick, your investment continues” → This benefit can be obtained with a CI rider on term insurance that’s much cheaper.
• ❌ “Get protection and investment together” → Yet both are suboptimal: protection is more expensive, investment grows slower.
• ❌ “Your child’s college fund will be ready” → Yet surrender value in year 15 can be far below illustration due to hidden costs.

What Should You Do Instead?

Mathematically better strategy:

1. Buy pure term life insurance (pure protection, no investment)

   • Premiums much cheaper (can be 1/3 to 1/5 of unit-link)
   • Higher coverage with same premium
   • No cash value, but that’s what keeps premiums cheap

2. Invest the rest in index funds

   • 100% of your money works from day one
   • Lower costs (index fund expense ratio ~0.5-1.5% vs unit-link total cost 4-6%)
   • High liquidity (can be redeemed anytime without large penalties)
   • Flexible (can stop, add, reduce as needed)

3. Separate protection and investment

   • Insurance for protecting against death/critical illness risk
   • Investment for growing wealth
   • Two different goals need two different products

Further reference: OJK has published a Life Insurance Product Guide explaining differences in insurance products including unit-link.

Is Unit-Link Always Bad?

For most people: yes, unit-link is not an optimal choice.

Unit-link might make sense only if:

• You’re truly undisciplined at saving/investing on your own (even with auto-debit)
• You don’t mind paying more for the “convenience” of bundling
• You’ve understood all the costs and are still OK with lower returns

But honestly: if you’re disciplined enough to pay unit-link premiums of hundreds of thousands per month, you can certainly discipline yourself to auto-debit index funds for hundreds of thousands per month.

Your fear of investing directly is being exploited to sell products that are more expensive and less optimal.

Stories That Should Give You Peace of Mind

The JCI always bounces back

Every crisis that has occurred — 1998, 2008, 2013, 2015, 2020 — the JCI has always recovered and reached new all-time highs. Patient investors are always rewarded.

Mutual funds are legally protected

Your assets are stored at a custodian bank (BCA, Mandiri, etc.), not at the investment management company. If the investment manager goes bankrupt, your money still exists and can be transferred to another manager.

OJK actively supervises

OJK regularly cracks down on illegal investments. The Satgas Waspada Investasi (Investment Alert Task Force) has stopped hundreds of illegal entities. Indonesia’s official investment ecosystem is much safer than people imagine.

How to Overcome Fear

1. Start small — IDR 10,000 or IDR 100,000. An amount that if lost wouldn’t affect your life. The goal isn’t profit, but learning.

2. Understand that fluctuation is normal — your portfolio will go up and down. This isn’t a danger sign — it’s the natural behavior of markets.

3. Don’t check daily — the more often you look at your portfolio, the more anxious you’ll be. Checking once a month or even every three months is enough.

4. Invest money you won’t need for 5+ years — this removes pressure to sell when markets drop.

5. Read and learn — the more you understand how investing works, the less fearful you’ll be. Fear usually comes from ignorance.

Conclusion

Your fear of investing is reasonable. Indonesia does have a history of investment scams that have traumatized many people. The stock market does fluctuate and sometimes drops sharply.

But these facts are also true:

• Official investments (registered with OJK) are safe from a regulatory standpoint
• The JCI has always recovered from every crisis in its history
• Index funds allow you to invest starting from IDR 10,000
• Not investing means your purchasing power will definitely decline due to inflation
• The biggest risk is not investing at all

Don’t let fear rob you of your financial future. Start small, start now.

References

1. Historical JCI Data: IDX - Statistical Reports
2. 2008 JCI Crisis: Stai Das Umsel, JCI Plunges to All-Time Low
3. COVID-19 Crash 2020: Infovesta, COVID-19 Impact Analysis on JCI
4. Investment Regulations: OJK Mutual Fund Portal
5. Investment Alert Task Force: OJK - Satgas Waspada Investasi
6. Insurance Product Regulations: POJK No. 23/POJK.05/2015 on Insurance Products and Marketing
7. Life Insurance Guide: OJK Sikapi Uangmu - Life Insurance Products
8. Unit-Link Fee Structure: Analysis based on unit-link life insurance product illustrations as regulated in POJK 23/2015, specifically provisions on acquisition cost transparency, investment management fees, and premium allocation
9. Term Life vs Unit-Link: Structural cost comparison based on unbundling protection and investment principles, referencing global insurance industry best practices (Vanguard, “Principles for Investing Success”, 2019; Bogle, “Common Sense on Mutual Funds”, 2010)

Disclaimer: This article is for education only, not investment advice. Investing involves risk. Do your own research and consult a financial advisor if needed.

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