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What is the risk of investing with a BPR?

BPR or Bank Perkreditan Rakyat are Local Banks in Indonesia. They are limited by law what they can do (e.g. they are not allowed to invest in money in the stock trade).

They give quite high interest on time deposits and as far as I understand those deposits are guaranteed by the government (LPS) for a max of 2.000.000.000 per person per bank. With a BPR in Bali I get 8.75% gross (which is 7% net) plus 1% cash back, so,  in total 8% net.

I try to understand the risk I run by doing this.

I’m a strong advocate for Community Banks.  As you note, they historically offer higher interest rate returns than do commercial banks, and they are a great way of helping to support your banjar beyond contributions for temple maintenance, village expenses and such. 

But, as with any investment approach, one needs to keep the concept of spreading risk in mind…in other words, avoid putting all your eggs in the same basket. 

Being a “player” in your banjar’s community bank shows your commitment to your village, and your sincere desire to be a part of the community. 

I would not suggest a community bank beyond the banjar where you live, and I also would not suggest community banking for anyone here on a short term basis.

I’m a strong advocate for Community Banks.  As you note, they historically offer higher interest rate returns than do commercial banks, and they are a great way of helping to support your banjar far beyond contributions for temple maintenance and such. 

But, as with any investment approach, one needs to keep the concept of spreading risk in mind…in other words, avoid putting all your eggs in the same basket. 

Being a “player” in your banjar’s community bank shows your commitment to your village, and your sincere desire to be a part of the community. 

I would not suggest a community bank beyond the banjar where you live, and I would also not suggest community banking for anyone here on a short term basis.

I’m a strong advocate for Community Banks.  As you note, they historically offer higher interest rate returns than do commercial banks, and they are a great way of helping to support your banjar far beyond contributions for temple maintenance and such. 

But, as with any investment approach, one needs to keep the concept of spreading risk in mind…in other words, avoid putting all your eggs in the same basket. 

Being a “player” in your banjar’s community bank shows your commitment to your village, and your sincere desire to be a part of the community. 

I would not suggest a community bank beyond the banjar where you live, and I would also not suggest community banking for anyone here on a short term basis.

1. Never put all your eggs in the same basket
2. The higher the return the higher the risk
3. Spread your portfolio amongst the major investment threads
4. Only invest that money which you can afford to lose

A few principles which could be helpful- PS I'm not a finance guru

A community bank is a standard investment thread

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