Preparation to Welcome the Bright December after ‘November Rain’

Hi Moduers,

End of November is approaching, have you started your investment journey? For you who have not, let’s start especially when there is still promo available only in November!

Do you often hear about the saying of ‘There will be Sunshine After the Rain’? Let us give some interesting facts for you to better prepare the month of December that will possibly be brighter after ‘November Rain’.

What interesting facts are there in December?

From year 2001-2018, JCI has shown positive performance for 18 times. Yes! That means JCI has always been showing positive performance in December for the past 18 years, with average increase of 4,42%. The highest increase was in 2003 (12,12%) and lowest increase was in 2013 (0,41%). This phenomenon is also widely known as window dressing.

What is window dressing and how is it related to the capital market?

Moment window dressing is widely known as the period where market performs in a more positive direction towards year-end, which is in the month of December. For mutual funds, window dressing tends to be more related to equity fund due to the higher portion of equity (minimum 80%) in this fund type. The cause of window dressing for mutual fund industry is due to Investment Managers trying to maximize their fund performance by performing portfolio rebalancing during financial statement releases at the end of the year.

However, the effort to maximize mutual fund performance is not only done during end of year only. Investment Manager actively manages their mutual fund portfolio. Hence, it is important to assess the investment strategy prior to investing to certain mutual fund product. Different documents, such as Prospectus and Fund Fact Sheet as well as indicators such as sharpe ratio and standard deviation are available to help your assessment prior to choosing specific mutual fund products. These will be discussed in the next article!

So, when is the right time to invest?

The answer is anytime!

Although window dressing phenomenon occurs only at year end, investing could still be done at any time. Why? When we are investing, we need to also consider the financial goals and the investment period. Moreover, certain investment type is suitable for certain period. This is also why it is important to perform periodic portfolio review to ensure maximum performance of your portfolio. We will discuss in more detail regarding this in the next article, stay tune!

 

So, let’s start investing regularly. As discussed in the article Financial Freedom – Is It Important?, if you invest the amount of Rp 10.000,- on daily basis for 30 years with return assumption of 10% per year, your total investment by the end of period can reach around Rp 690 million.

 

Have you had enough preparation to welcome the bright December? 😊

 

#ILoveYou10K

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