Types of Stocks that Beginner Investors Can Choose

  

 

  Theoption of developing funds through stock investment has the opportunity to provide you with optimal profits. If you currently intend to explore as a stock investor, you need to understand the basics of stock investing and investment strategies. Then, it's a good idea to study the types of stocks that novice investors can choose from that are available. Citing data from the Indonesia Stock Exchange (IDX), as of October 2019, there were 320 stocks listed on the main trading board and 335 stocks listed on the development board.


  The shares listed on the main board of the stock exchange are listed companies that have been operating for at least 3 years, have made a profit and have net assets of at least Rp. 100 billion. Meanwhile, the shares listed on the new development board have net assets of at least Rp5 billion, operate for a minimum of 12 months and in the second year after going public, they must make a profit. In order not to be confused in choosing which stocks are suitable as initial investments, you can look at the following groupings of types of stocks that novice investors can choose:


Types of Stocks that Beginner Investors Can Choose Types of shares by business sector


There are around nine business sectors in which companies listed on the IDX take part. Beginner investors need to know the division of the sector so that their investment strategy can be better, including regarding investment risk management.


The nine business sectors include the agricultural sector, the mining and oil and gas sector, the basic industrial sector (cement, metals, chemicals, etc.), the banking financial sector, the trade sector, the infrastructure sector, the property sector, the consumer goods sector and the various industrial sectors.


Types of shares by market capitalization


Market capitalization is the value of a company's shares outstanding in the market. This value is not the same as the value of the company's assets. In other words, the market capitalization of a company does not reflect the value of the company's assets. There are three types of stocks that you need to know based on market capitalization value:


First, large-cap stocks, also known as first-tier stocks or blue chips. This stock has a large market capitalization of over IDR 40 trillion. Big cap stocks are a favorite of capital market players, especially long-term investors because they are generally quite liquid, have good fundamentals, have stable performance and often pay dividends. Big cap stocks are also the driving force for the Jakarta Composite Index (JCI). Examples of large-cap stocks include BBCA, ASII, TLKM.


Second, stocks with medium capitalization or commonly called second liner stocks (middle caps). This stock has a medium capitalization of under Rp40 trillion. The company's fundamentals are considered quite good but are still in the developing stage so that price movements are quite attractive. Stock prices are generally still cheap, quite worthy of being chosen by novice investors who have small capital. Examples of this stock group include ANTM, BSDE, PWON, and others.



Third, small capitalization shares (third liner). As the name implies, the capitalization of shares in this group is still small, below Rp1 trillion. These small stocks often become fried stocks for the bookies because the prices are still cheap. For novice investors, you should avoid this third-tier stock because the risk is too big.


Types of stocks based on stock index


The stock index is an indicator that describes the size of the price changes in the stock market in a certain period of time. The index is intended so that investors have an accurate picture of the conditions and direction of stock market movements. So that the investment strategy can be more adequate. There are about 10 stock indices on the IDX. It is important for novice investors to know at least 3 types of stocks based on stock indexes.


First, stock LQ45. Stocks that are included in the LQ45 Index are often called leading stocks. Consisting of 45 high-liquidity shares, listed as 60 shares with the largest market capitalization, the shares must also be listed on the stock exchange for at least the last 3 months, the issuer's performance is considered good and prospective. The list of stocks included in the LQ45 Index is reviewed every six months by the IDX. Some of the shares of LQ45 residents until January 2020 include ADRO, ANTM, JSMR, UNVR, BBCA, and others.


Second, Islamic stocks. This is a collection of 30 stocks that meet sharia criteria taking into account market capitalization and liquidity. These shares are listed in the Jakarta Islamic Index 30 (JII 30), including ASII, BSDE, INDF, WIKA, and others. There is also JII 70 which contains 70 of the most liquid sharia shares. For those of you who want to focus on investing in Islamic stocks, you can use this index reference to choose attractive Islamic stocks.


Third, BUMN shares. Many state-owned companies are listed on the stock exchange. You can see the stock options in the SOE stock index or IDX BUMN20 which contains 20 selected SOE stocks. These include ADHI, PTBA, SMGR, and so on.


Types of shares based on claims


There are two types of shares that are commonly traded based on the ability to claim or claim rights.


First, common stock (common stocks). This is the most common type of stock where the shareholder is entitled to a dividend when the company makes a profit. However, when the company is in bad shape, common stockholders are not prioritized to receive dividends.


Owners of ordinary shares have voting rights at the General Meeting of Shareholders (GMS) to the extent of the percentage of shares they own. The larger the share portion, the greater the voting rights owned which can affect the company's operations. Common stock tickers generally appear in four letters, such as BBCA, HMSP, UNVR, and so on.


Second, preferred stock (preferred stock). This type of stock has characteristics between stocks and bonds because it can provide fixed income like debt securities. Preferred shareholders are prioritized in receiving dividends and distributing the company's remaining assets when liquidation occurs. Preferred stock has redemption rights and can be exchanged for common stock. The ticker or preferred stock code is generally added with the letter P behind, for example BBCAP, HMSPP, and so on.


Preferred stock finance is relatively limited in number so it is rather difficult to trade because it is not very liquid. In addition, unlike ordinary shareholders, preferred shareholders do not have voting rights at the General Meeting of Shareholders (GMS) so they are often referred to as “silent partners”.


Well, those are some types of stocks that are grouped based on each criterion. By knowing the types of stocks that novice investors can choose, you can more easily determine which stocks are the right ones to choose as prospective investments. Are you ready to invest now?

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