Budi Frensidy Assesses Financial Intelligence Armed with Personal Finance
Nino Eka Putra ~ FEB UI PR
DEPOK – Teaching Staff at the FEB UI Accounting Department and Financial Mathematics Book Writer, Budi Frensidy released the article published in the Cash newspaper, Bursa column, page 4, on Monday (11/04/2019) that in the last two or three decades, financial science and its products in this country continue to grow. In 1995 there were no mutual funds, SUN, ORI, Islamic bonds, retail sukuk, EBA, ETF, and / or REIT in our capital market, let alone called KPD (Fund Management Contract). The investment manager profession is also unknown.
Mutual funds and the professional investment manager began to bloom after Law No. 8 of 1995 concerning the Capital Market. Previously, finance students here only studied financial management, sometimes for up to three semesters. There are no investment management courses, derivative securities, fixed income securities analysis, and risk management as of now. Understandably, in 1988 there were only 24 publicly traded companies with a market capitalization of Rp.444 billion and daily transactions of Rp120 million. While corporate bonds are still a matter of one-handed fingers. Compare this with the current BEI capitalization of IDR 7,200 trillion with daily transactions approaching IDR 9 trillion.
“When we only knew about corporate finance courses, there were many other branches of finance overseas. One of them is personal finance, a branch of finance that deals with personal, family, and small company financial management. Personal finance is different from corporate finance which studies corporate financial management. Knowing the number of companies that have gone public in Indonesia is still around 670 while corporations that have issued bonds range around 100, corporate finance applications in Indonesia are not as much as in countries with market-based financial systems such as America and the UK, “said Budi Frensidy.
When a company needs investment funds, corporate finance only provides two alternative financing, namely issuing new shares or issuing bonds. Most companies in Indonesia do not have that access. The choice is only the owner to deposit additional capital or owe the bank. Therefore, the provision and teaching of personal finance is more needed in Indonesia than in developed countries with a market-based financial system.
Until now personal finance in this country has not been deemed necessary for financial students to study, let alone made a compulsory subject. Personal finance is only offered in financial planning courses.
Although personal finance is more useful than corporate finance in equipping graduates with the financial logic needed, either to become entrepreneurs or work in small and medium-sized companies, only one or two of our tertiary institutions include it in the curriculum. While corporate finance is mandatory in the faculties of economics and business with the aim of preparing graduates to work in multinational companies and large corporations.
The books teach how to manage the finances of a corporation that has access to the capital market. There is nothing strange if the alternative funding discussed is stocks and bonds. The problem is, in Indonesia the number of companies that have access to these two financial instruments is still less than 750, given that most of the issuing bonds are also listed companies.
“Sadly, corporate finance books written by our experts also lack added value. The books fail to remind this reality because they only compile other books or refer to foreign reference books and not the real situation in Indonesia, “he said.
Personal Finance Application
Examples of personal finance applications are how to plan for financial for old age or for other purposes, plus-minus Sharia mortgages compared to conventional mortgages, plus-minus buying cash versus credit, how to calculate yields from the education savings that are offered, how to calculate effective interest a loan, as well as how to arrange a mortgage schedule and make the necessary refinancing.
Armed with personal finance, students will get the logic and calculations needed to solve various financial problems in this life smartly, not by memorizing. They will realize that flat interest is a bank trick because it is not real interest, that many bank products are poisonous or less useful, that the discount rate and the interest rate are not exactly the same, and that the bank’s relationship with its customers is asymmetrical.
Here are some questions in personal finance. Which is more attractive, receiving a pension of Rp400 million only once or Rp3 million every month for life? A manager intends to buy a house with a mortgage. If the house price is Rp600 million and the mortgage rate is 9% p.a., how much is the down payment?
Budi Frensidy Assesses Financial Intelligence Armed with Personal Finance
Nino Eka Putra ~ FEB UI PR
DEPOK – Teaching Staff at the FEB UI Accounting Department and Financial Mathematics Book Writer, Budi Frensidy released the article published in the Cash newspaper, Bursa column, page 4, on Monday (11/04/2019) that in the last two or three decades, financial science and its products in this country continue to grow. In 1995 there were no mutual funds, SUN, ORI, Islamic bonds, retail sukuk, EBA, ETF, and / or REIT in our capital market, let alone called KPD (Fund Management Contract). The investment manager profession is also unknown.
Mutual funds and the professional investment manager began to bloom after Law No. 8 of 1995 concerning the Capital Market. Previously, finance students here only studied financial management, sometimes for up to three semesters. There are no investment management courses, derivative securities, fixed income securities analysis, and risk management as of now. Understandably, in 1988 there were only 24 publicly traded companies with a market capitalization of Rp.444 billion and daily transactions of Rp120 million. While corporate bonds are still a matter of one-handed fingers. Compare this with the current BEI capitalization of IDR 7,200 trillion with daily transactions approaching IDR 9 trillion.
“When we only knew about corporate finance courses, there were many other branches of finance overseas. One of them is personal finance, a branch of finance that deals with personal, family, and small company financial management. Personal finance is different from corporate finance which studies corporate financial management. Knowing the number of companies that have gone public in Indonesia is still around 670 while corporations that have issued bonds range around 100, corporate finance applications in Indonesia are not as much as in countries with market-based financial systems such as America and the UK, “said Budi Frensidy.
When a company needs investment funds, corporate finance only provides two alternative financing, namely issuing new shares or issuing bonds. Most companies in Indonesia do not have that access. The choice is only the owner to deposit additional capital or owe the bank. Therefore, the provision and teaching of personal finance is more needed in Indonesia than in developed countries with a market-based financial system.
Until now personal finance in this country has not been deemed necessary for financial students to study, let alone made a compulsory subject. Personal finance is only offered in financial planning courses.
Although personal finance is more useful than corporate finance in equipping graduates with the financial logic needed, either to become entrepreneurs or work in small and medium-sized companies, only one or two of our tertiary institutions include it in the curriculum. While corporate finance is mandatory in the faculties of economics and business with the aim of preparing graduates to work in multinational companies and large corporations.
The books teach how to manage the finances of a corporation that has access to the capital market. There is nothing strange if the alternative funding discussed is stocks and bonds. The problem is, in Indonesia the number of companies that have access to these two financial instruments is still less than 750, given that most of the issuing bonds are also listed companies.
“Sadly, corporate finance books written by our experts also lack added value. The books fail to remind this reality because they only compile other books or refer to foreign reference books and not the real situation in Indonesia, “he said.
Personal Finance Application
Examples of personal finance applications are how to plan for financial for old age or for other purposes, plus-minus Sharia mortgages compared to conventional mortgages, plus-minus buying cash versus credit, how to calculate yields from the education savings that are offered, how to calculate effective interest a loan, as well as how to arrange a mortgage schedule and make the necessary refinancing.
Armed with personal finance, students will get the logic and calculations needed to solve various financial problems in this life smartly, not by memorizing. They will realize that flat interest is a bank trick because it is not real interest, that many bank products are poisonous or less useful, that the discount rate and the interest rate are not exactly the same, and that the bank’s relationship with its customers is asymmetrical.
Here are some questions in personal finance. Which is more attractive, receiving a pension of Rp400 million only once or Rp3 million every month for life? A manager intends to buy a house with a mortgage. If the house price is Rp600 million and the mortgage rate is 9% p.a.,