Mutual Funds vs Bank Savings, which is more profitable?

Investors in mutual funds in our country are quite a few. Datas from the Financial Services Authority (OJK) stated that the number of mutual fund investment actors is only about 340 thousand people or 0.13 percent of the total population of Indonesia.

Perhaps you are wondering, is mutual fund investment profitable? Co-founder and Chairman of Bareksa, Karaniya Dharmasaputra, said investment in mutual funds is more profitable than banks. According to him, the type of mutual fund that is suitable for the retail segment is money market funds.

“In the Bareksa data, this type of mutual fund is very stable because most of it is deposited in short term deposits and bonds. If the new investors directly invest in the equity fund in the beginning, they will tend to be afraid of the risks,” explained Karaniya when met at the Indonesia Stock Exchange Building (IDX) , Jakarta, Thursday (19/1).

Karaniya tried to compare head to head between mutual funds with bank savings. According to Bareksa datas as of January 2017, the interest rate return from bank savings is only 0.7 percent per year, while money market mutual funds are much larger which is 7.65 percent per year.

“For example, if you invest Rp 1 million in money market funds, with interest rate of 7.65 percent means you earn interest return of Rp 76,500. If you invest in the bank, the interest is only 0.7 percent or about Rp 7,000,” he explained.

In addition, there are much less taxes accounted in the mutual fund investments compared to the investment in bank savings. In addition, there is also an administrative fee charged by the Banks in Bank Savings which is about Rp 12,500 per month. In other words, you will be charged by Rp 150,000 per year.

Unlike savings, in mutual funds if you save Rp 1 million, you will get a return of Rp 76,500 or 7.65 percent. While saving in the bank in one year even cut off Rp 144,000 or 14.44 percent, because the small interest can’t cover administrative costs and taxes.