Investment decisions can be made by individuals or entities that have excess funds. According to Sunariyah (2004: 4) investment in a broad sense consists of two main parts namely:
Investment in real assets (real assets)
In the form of tangible assets such as gold, silver, diamonds, art goods and real estate.
Investment in securities (Financial Asset)
The form of securities which are basically claims for real assets controlled by the entity. The choice of financial assets in the context of investment in an entity can be done in two ways:
Direct investment
Direct investment can be interpreted as the ownership of securities directly in an entity that has officially gone public in the hope of getting benefits in the form of dividend income and capital gains.
Indirect investment
Indirect investment occurs when securities that are owned are traded again by an investment company that functions as an intermediary.
Investment Risk
Risk is the possibility of investments made by investors failing to meet the rate of return that investors expect. The types of risks that may be faced by investors in carrying out investment activities stated by Reilly (2003: 15), including:
Business Risk
The possibility of losses suffered by the company due to the profits obtained are smaller than the expected profits.
Financial Risk
Risks arising from the way companies finance their activities, for example, the use of debt in financing company assets.
Liquidity Risk
There are uncertainties that arise when securities are on the secondary market.
Exchange Risk
This risk is related to fluctuations in the exchange rate of the domestic currency with the value of the country's currency.
Country Risk
This risk is related to political stability and the economic environment in a country.
The risks that must be faced in every investment decision requires investors to be careful and conduct analysis and careful consideration. Sufficient knowledge and understanding will help investors in considering an alternative investment. Therefore an investor or investment actor who will invest in stock securities should have an understanding of the capital market how to invest in securities as well as the characteristics of the stock itself.
Investment Objectives
Basically the purpose of people investing is to make some money. More specifically according (Tandelilin, 2001: 5) there are several reasons why someone makes an investment, including:
To get a more decent life in the future.
A wise person will think about how to improve their standard of living from time to time or at least try to maintain their current income level so that it does not decrease in the future.
Reducing the risk of inflation
By investing in the ownership of a company or other object, a person can avoid the risk of decreasing the value of his wealth or property due to the influence of inflation.
Encouragement to save taxes
Some countries in the world carry out many policies that encourage the growth of investment in society through the provision of taxation facilities to the public who invest in certain business fields.