NOW i KNOW ! Cikaldana newsletter no. 02-2014

NOW i KNOW !

CIKALDANA NEWSLETTER NO. 2 - 2014

GREETINGS FROM CIKALDANA Here comes our second edition of our quarterly newsletter.

In this rapidly growing world, having a life pampered with luxury is no non-sense for some people. With the growth of the ultra high-networth (UHNWI) individuals, the presence of luxury service provider continues to becoming noticeable, not only in major countries, but also Indonesia. This type of company provides assistance and exclusive access to any luxury services and goods, from simple to the most almost-impossible requests.

This NOW i KNOW ! edition features the rise of luxury services company providing personal concierges for their clients. Find the article in ’Luxury Service at Your Door Step’ section.

On this issue: Economic Update Q1 2014 2 Retiring on Track 3 Fixed Income: Retail Bonds, what and why 4 Luxury Service at Your Door Step

5

We hope this newsletter could be of use to you and enhance your financial wisdom. Enjoy reading!

Regards,

Do you know?

Fitrah Avianti Marketing Director The term ‘blue chip’ comes from the poker game where the highest chip denomination is colored blue.

www.cikaldana.com

1

Economy Corner

ECONOMIC UPDATE Q1 2014 2014 – A good start despite the big question mark on the general election effects

After a bumpy year for the country’s economy in 2013, Indonesia is expected to perform well in 2014.

Between January-March, the country was recorded to set up a more confident economic and business environment platform. Several macro-economic indicators were noticed showing an optimistic performance during the first quarter of the year.

By end-March, Rupiah was closed at IDR 11,404 per US dollar, strengthening by around 7% from IDR 12,270 in the previous quarter. Inflation continued to show positive trend, moving downward to 7.32% in 1Q14 compared to 8.38% in 4Q13. This is aligned with the government target to set the inflation rate at 4.50%±1 for this year.

Meanwhile, Bank Indonesia kept the BI rate flat at 7.50% after reviewing the overall economic condition and forecast for the future in which the rate is still consistent with the inflation projection in 2014 at around 4.5% ± 1%.

In the recent weeks, the Jakarta stock market boosted with prices rally after the main opposition party nominated Jakarta Governor Joko Widodo as its presidential candidate. At end-March, the composite index was closed at 4,768 rose by around 12% from 4,274 in the previous quarter. The growing optimism over the general election has also help the index to accelerate in this quarter, as well as boosting the domestic spending.

Looking ahead, Indonesia’s economy is expected to continue growing on the back of healthy consumer spending and strong investment. The economy is also well-positioned to benefit from the more stable political landscape in the country. As such, for 2014, the central bank forecasted GDP growth to be at the range of 5.50% to 5.90%.

Source: Bank Indonesia, IDX

www.cikaldana.com

2

Financial Planning Corner

RETIRING ON TRACK Embracing retirement without worry and making it one of the best time in your life

Planning for a retirement fund has always been a challenging task for almost everyone. Typical questions arisen are: Do I need a retirement fund? Do I need to plan for my retirement? Well, one good news: there’s no right or wrong answer to the questions.

Multiply your current living cost – monthly or annually – by the duration of retirement period. Take into calculation the inflation of the living cost, and you will get the Number. This Number is the amount of fund you need to pay for your living cost during your retirement period.

Ones whose answer is YES however, usually feel the need to have a sum of fund to cover the livingcost for themselves (and with their spouses) during the ages they are no longer working for a living (or in other words, no longer have income), that is the retirement age. The feeling of that need mainly arise from a presumptions that the current pension scheme provided by the company or government’s social system would not suffice the objective.

By planning, a sum of money in an amount of that Number has to be available to you, as you enter retirement age. The next thing you need to know is whether you will have that fund available with you at your retirement age; and whether you will need to save/invest to accumulate your asset(s) for retirement fund.

Those feeling and presumptions need to be taken further to some quantitative measures, in particular for ones to be more objective in looking whether or not creating a retirement plan is a necessary option.

What are the quantitative measures? How do you know how much fund we need for retirement?

You need to know what age you plan to start retiring and what age you are to end your retirement age.

The period between the starting and ending of retirement age is the duration which you will need the fund.

Next, you need to know how much fund or money will be needed in that duration. You can calculate and estimate the ‘how much’ by taking your current living cost as one of the cost reference.

www.cikaldana.com

Examples to give some ideas to the Numbers: suppose you are currently at age-35, plans to start retirement at age-55, and plans to end retirement at age-70. Assume your cost of living of Rp15-million per month with an inflation rate of 10% annually.

If you assume to put your future retirement fund into time deposits or government bonds with a 6% net annual yield, the retirement fund needed to be available at your retirement age (55 years) will be around Rp22.5-billion.

Planning to have that Rp22.5-billion at age 55, you have 20 years time to accumulate the fund by saving or investing. Investing from scratch into an aggressive financial investment instrument, a monthly investing of Rp3.4-million continuously for 20 years, can potentially help you achieve that Number at your age 55.

3

Research Corner

FIXED INCOME: RETAIL BONDS, WHAT AND WHY A growing era of retail bonds in Indonesia

Talking about investing in a stock market, the first thing comes to many people’s mind is usually the stock. The dynamic of stock investments, higher media exposures and success stories of some people who invest in stocks, make the stocks more appealing. Many have few knowledge that bonds are also traded in a stock market.

Bonds or ‘obligasi’ or also known as ‘surat utang’, is a kind of investment instrument in stock market available for retail investors (individuals) and corporates. Bond is a debt investment in which an investor loans money to an entity (corporate or government) for a defined period of time at a fixed interest rate. The loans are usually used by the company or government to finance their projects or activities.

Bond is classified as fixed income investment. The interest rate or called ‘coupon’ is paid to the investors periodically during the period of time (usually 3-or-6 months), while the principal is paid at the maturity date.

Bond is considered as a long-term investment. The attractiveness of bonds for the investors lie down in the interest rate that is usually higher than a deposit account; and for the lower risk compared to stocks.

As for the bond issuers, they benefit from obtaining loans with lower interest rates than bank loans.

bonds or called ‘sukuk’. The major difference between conventional bonds and sukuk is that sukuk have to comply with Sharia principles or Islamic law. In sukuk, the issuers have to define the underlying assets, which is not the case in bond.

Talking about risks, there is always risk in any investments. Bonds are considered to have lower risks compared to stocks, especially bonds that are issued by government. Among others, there is risk of inflation, when the inflation rate runs higher during the tenor of the bonds. The longer the term of a bond, the greater the chance that the yield payout won't keep pace with inflation.

Indonesian government has released several retail bonds name ORI (Obligasi Retail Indonesia) since 2006 (ORI 001). In 2009, the government started to offer Sukuk (SR-001) to retail investors. Taking a look at the interest rates, ORI and Sukuk generally offer higher return than deposit account. This is why some people goes to bonds for their investment.

Below is the list of current ORI and Sukuk issued yet to mature:

Along with the growth of Islamic banking and investment, notice also the growth of Islamic

www.cikaldana.com

4

Lifestyle Corner

LUXURY SERVICE AT YOUR DOOR STEP The rise of luxury services providing personal concierge

Are you looking for a private jet for an exclusive trip?

A yacht for a romantic cruise?

Luxury suite in an exquisite hotel in Dubai?

May be an exclusive ticket for a red carpet event?

Or the newly-launched luxury watch available only in limited edition?

You once may be wondering how to get those luxury services. But now you can easily dial your personal concierge and they will provide you with exclusive access to any luxury services and goods.

As simple as that.

Despite the economic turbulence, the ultra high-networth individuals (UHNWI) number has been growing very fast in the world currently; 3% increase from a year before and ballooned by 59% since 2003, according to the 2014 Wealth Report released

by Knight Frank. These count the number of individuals with US$30million or more in net assets to over 167,000 worldwide.

For people live in a high class society, having a personal concierge that could provide any of their needs is beyond measure. This helped the growth of luxury service providers not only in major cities like London, Paris or New York, but also in New Delhi, Seoul, and of course Jakarta.

Quintessentially, Prive International, John Paul, Preferred Group, Pure Entertainment Group, Inc. and One Concierge are among the well-known companies providing this type of service.

A personal concierge responds to any request of their clients, from simple to the most unusual. Their services varies from 24/7/365 daily concierge, tablebooking in a fine restaurant, babysitter-hiring, complete assistance for business or vacation trip around the world, access to private events and business networks, private jet, helicopter or yacht charters, exclusive residential, luxury goods, access to VIP events, to personal shopping assistant/image consultant or personal security services. Basically anything. You mention.

Some of them may need your membership, but there are also others that don’t. Their clients are typically high net worth individuals whom are in business, entertainment, sports and politics. They could be bankers, CEOs, celebrities, top 100 Forbes list, or anyone who enjoy living in a lap of luxury.

How much do they charge? Membership fee may vary between providers. It also depends on the complexity of the package. Taking the range of the cost, it may go from around US$1,500 per person per year to around US$45,000 per person per year, for the most elite membership.

Well, now if you need to make a reservation in a hard-to-get-table Michelin restaurant, you know where to seek for help. Your personal concierge is just a dial away.

PT Cikaldana Korpora Sovereign Plaza 21st Floor, Jl. TB Simatupang Kav.36, Jakarta 12430 P: +62 21 2939 8727, F: +62 21 2939 8898 E-mail: contact@cikaldana.com

www.cikaldana.com

5