The phrase beating the market means that we get a higher return investment than the Jakarta Composite Index. Even Warren Buffet, CEO and chairman of the investment firm Berkshire Hathaway as also known as Oracle of Omaha, says it’s hard for him to do better than the broader market (per New York — CNN Business). So should we even try?
To make it clear, I will explain the burdens that every investor and trader should have known whenever they do buy/sell several stocks, there are investment fees. This is the most important thing that your brokerage doesn’t tell you. Most of us only focus on brokerage fees, however, several fees matters too, because it can significantly reduce your capital gain compared to the market.
● Brokerage fees are a commission collected by securities companies to investors. How much commission is charged? Transaction commission fees for each investor are determined based on the magnitude of the frequency and transaction value of the investor in a given period. For example, an investor is charged a commission fee of 0.18%, then the commission amount for the above transaction is: 0.18% x Rp 1,000,000 = Rp 1,800.
● JSX Levy (IDX Levy) is a service fee that is charged to investors every time a share purchase transaction is made using the transaction facility on the Indonesia Stock Exchange. How much does the Levy cost? The amount of Levy is determined by the decision of the Board of Directors of the Indonesia Stock Exchange. If the determination of the Levy IDX is 0.03%, then the calculation of the Levy IDX number is 0.03% x Rp 1,000,000 = Rp 3,000.
● VAT brokerage fees
VAT or Value Added Tax is a tax that is levied under the provisions of Law no.18 of 2000 concerning Value Added Tax and Luxury Goods for services rendered. The tax value on the above stock transaction is 10%. So the VAT calculation becomes 10% x (Rp1,800 + Rp3,000) = Rp 480
KPEI fee or fees for PT. Kliring Penjaminan Efek Indonesia is a fund that must be paid by an investor for each transaction made to guarantee the fulfillment of the settlement obligations for the transaction made. The amount of the guarantee fund rate is determined based on a decision from the Directors of the Indonesian Clearing and Guarantee Corporation (KPEI), which is 0.01%. In the example of the transaction case above, KPEI fee calculation is 0.01% x 1,000,000 = Rp 100
● Sales Tax
Sales tax or income tax on income from securities sales transactions. The income tax is levied based on Article 4 paragraph 2 of Law no. 10 of 1994 concerning Income Taxes. Income from the sale of the founder stock transaction is subject to an additional income tax of 0.1%. So the calculation of Sales tax: 0,1% x Rp1.000.000 = Rp 1,000.
0.1% x Rp 1,000,000 = Rp 1,000.
Based on the description above, in general the total amount of additional costs incurred by an investor conducting a transaction such as the case example above is:
Brokerage fees + IDX Levy + VAT + KPEI Fee + Sales Tax
= 1,800 + 3,000 + 480 + 100 + 1,000
= Rp 6,380
Once again, although it’s just a small number, it can reduce your profit from the way it should be. Regardless of the burdens that I explained before, the emotional psychology also becomes the other burdens that an investor or trader could have. As we know to buy low / sell high is the basic formula that everybody knows but does it work? You can answer it by yourself. Anyway, this formula also may create a sense of fear and greed in the stock market, but then I wouldn’t focus on this point.
As Warren Buffet says “Risk comes from not knowing what you’re doing”. Well, instead of beat the market, it’s better to start to bear it, what I mean by bearing the market is actually to be more aware of the market. After knowing what you’re doing, so start by knowing what your risk is.