5 clever ways to transform THR into future wealth with Bank DBS Indonesia
Indonesia, 28 Mar 2024 - Eid al-Fitr is just around the corner and euphoria abounds over the religious holiday allowance (
tunjangan hari raya
, THR). Everyone is counting the day the THR is paid so as to be able to fulfill their
Lebaran
needs and satisfy long-standing desires. However, amid the excitement, we often neglect proper financial planning and fail to set aside a portion of the THR into our savings account.
Once we receive the THR, we typically allocate the fund exclusively for Ramadan and Eid al-Fitr needs without considering investing some of the fund, unaware that this eliminates our opportunity to achieve a more financially secure future. Therefore, digibank by DBS is here to offer various solutions and guidance so that you can maximise your THR and ensure a secure future.
To that end, digibank by DBS recently held an educational session entitled "Live & Learn: How to Maximise THR to Prepare for the Future ". Let's take a peek at some of the tips shared so that you can manage your THR well!
1. Needs vs. wants: How to cleverly tell them apart
We may frequently tell ourselves, "I will buy what I WANT". In fact, financial security is anchored in the "I will buy what I NEED" mindset! Distinguishing between needs and wants is an important first step in managing finances wisely. Sustainable wealth is not only based on a large income but also on our ability to manage our expenses well.
Now, in this holy month of Ramadan, as a first step, identify your needs and make them a priority. These include paying the
zakat
al-Fitr, buying tickets for homebound trips (
mudik
), giving THR to domestic helpers, and so on. You can allocate a budget for other expenses such as breaking the fast together or
bukber
and stick to it to save money. Also, even though you may be tempted by
Lebaran
deals and discounts, it's important to stay calm and think rationally. It's best to buy items that are absolutely necessary and will be used optimally.
2. Create a simple budget based on the 50/30/20 rule
Once you distinguish between needs and wants, applying the principles of simple budgeting is also the right way to manage THR. You can follow the 50/30/20 rule that splits income into three main categories: needs, wants, and savings.
Set aside about 50 percent of your income for basic needs such as food, transportation, routine bills, and other necessities. Then, use 30 percent for wants such as new clothes, Eid al-Fitr ornaments, and others. Finally, set aside 20 percent for savings, emergency fund, and investment. This allows us to fulfill our basic needs and satisfy our wants without sacrificing our future finances as we slowly build wealth.
3. Invest THR for long-term financial goals
These days people often say, "Saving is just not enough. You need to invest!" However, keep in mind that investing is not something that can be done on the spur of the moment. As a first step, it is important to understand the "pay yourself first" concept, which means it is important to set aside income in order to prioritise your needs. Based on the simple budgeting method explained above, it is important to allocate a portion of THR for savings, emergency fund, and investment. This is important to be more proactive in managing your finances and reaping long-term benefits.
Inflation and time must be factored in when you invest money. Investing allows us to generate returns that beat inflation, allowing our money to stay at the same value over time. In addition, investing also harnesses the power of compounding, with profits earned from investments growing continuously over time.
However, before investing, make sure you have these three things: emergency fund (ideally 6-12 times your monthly living expenses), insurance, and knowledge about types of investment such as stocks, bonds, and mutual funds.
4. Invest in mutual funds
Investing THR in mutual funds is a prudent step to build wealth slowly. For beginner investors, mutual funds are one of the options because the funds are managed by professionals, namely investment managers, and supervised by the Financial Services Authority (OJK).
There are several steps to consider when investing in mutual funds. First, determine your investment objectives, whether you want to achieve significant capital growth in the long term, seek regular income, or strike a balance between the two. Secondly, choose a trustworthy fund manager, research the manager's track record and experience in managing investment portfolios. Finally, before deciding to invest in a particular mutual fund, it is important to pay attention to several performance criteria, such as AUM (Assets Under Management), Sharpe Ratio, which shows the amount of mutual fund return compared to risk, Expense Ratio, which measures the effectiveness of mutual fund management, and past performance (return).
Understand the different types of mutual funds that suit your risk profile and financial aspirations. For example, money market funds with minimal risk for short-term investments, fixed income funds with moderate risk and return, and equity funds with high market risk. There are also mixed funds that provide a combination of money market instruments, bonds and stocks, suitable for long-term investment goals that seek a balance between capital growth and fixed income.
5. Maintain discipline and consistency
Once we have created a budget and started investing in mutual funds, which can now be done regularly every month at an affordable capital starting from Rp100,000, the next thing to keep in mind is to not let these principles only apply to THR! By managing our finances well every day in a disciplined and consistent manner, we can build healthy habits in managing our money and increase our wealth over time.
Through digibank by DBS, Bank DBS Indonesia provides a range of features to make it easier for customers to take the steps above. These include easy access to mutual funds on the digibank by DBS application that offers more than 60 curated mutual funds that can be managed online 24/7 at an affordable capital starting from Rp100,000. Through the digibank by DBS app, investing in mutual funds becomes easier by virtue of three categories: Best Performance, Most Popular, and Best Scoring. The investment process can be done via one application without the need to visit a branch office or other investment intermediaries.
On top of that, through digibank by DBS, customers can manage and monitor finances, block or activate credit and debit cards, make money transfers without fees, experience practical transactions using QRIS, top-up e-wallets, and pay bills with one click without switching applications. digibank by DBS also regularly holds events such as 'Live & Learn' to educate the public about prudent financial management and profitable investments. More information about digibank by DBS can be accessed at
https://go.dbs.com/cerdik
.
Managing Director - Head of Consumer Banking at PT Bank DBS Indonesia
Melfrida Gultom
said, "In managing THR, it is important to take smart steps that can help us achieve an improved quality of life, not only for
Lebaran
needs but also for the future. As a customer-centric bank, Bank DBS Indonesia is committed to supporting every step of our customers' financial journey through digibank by DBS, which offers a variety of savings and investment features. All these efforts are made so that customers can 'Live more, Bank less' and have a meaningful
Hari Raya
and more productive finances without the hassle of banking."
Hopefully, these tips are helpful. Have a happy Eid al-Fitr with your loved ones!
[End]
About DBS
DBS is a leading financial services group in Asia with a presence in 19 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “
World’s Best Bank
” by Global Finance, “
World’s Best Bank
” by Euromoney and “
Global Bank of the Year
” by The Banker. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “
World’s Best Digital Bank
” by Euromoney and the world’s “
Most Innovative in Digital Banking
” by The Banker. In addition, DBS has been accorded the “
Safest Bank in Asia
” award by Global Finance for 15 consecutive years from 2009 to 2023.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets.
DBS is committed to building lasting relationships with customers, as it banks the Asian way. Through the DBS Foundation, the bank creates impact beyond banking by supporting businesses for impact: enterprises with a double bottom-line of profit and social and/or environmental impact. DBS Foundation also gives back to society in various ways, including equipping underserved communities with future-ready skills and helping them to build food resilience.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit
www.dbs.com
.
DBS Bank Ltd | 12 Marina Boulevard, DBS Asia Central @ Marina Bay Financial Centre Tower 3,
Singapore 018982 | Co. Reg. No. 196800306E
Tel: 65.6878 8888 | www.dbs.com
