financialtreat – will explain about Know, Understanding Bond Investment in the State which you will get in the following article. let’s look at this article carefully!
As a type of SBN or Government Securities, the popularity of bond investment is not as crowded as stocks and deposit investments. But, that doesn’t mean this type of investment has no interest. Therefore, with the investment of bonds in the country you will know more about it. Come on, let’s look at the discussion of this article on how to invest in government bonds.
Moreover, until now, the Government of Indonesia routinely still issues SBN in this Bond model. Meanwhile, the bonds issued by the government are indeed tradable types of retail SBN which are intended to be bought by the wider community, Indonesian citizens (WNI). By investing in government bonds you will be more free to know how to invest in bonds that are directly related to the people.
Know, Understanding Bond Investment in the State
Bonds themselves are generally Government Bonds (Sun) from the bond issuer to the party holding the bond along with a promise to pay the principal of the debt and interest at the time of payment maturity.
There are many parties that issue bonds, for example, governments that issue government bonds in their country’s currency or use foreign currency, or it can also be government forums, and also particle companies.
What is Bond Investment?
Bonds are government bonds issue by the government or companies with an exclusive term. By having a bond, it means that the country or company owes you the amount promise with the agree maturity time. Not only that, the debtor (in this case the state or company) will pay interest or coupons to you every month. Bond investment is also a conducive and capable investment model.
Characteristics of Bonds
1. Face Value
In bonds, there is such a thing as face value. The face value is the value of the principal debt that must be paid by the bond issuer at maturity.
Usually this value is liste in the bond sheet. The issuing party must explain and list the amount of funds neede, otherwise known as the amount of bond issuance. The determination of the amount of funds is base on cashflow, the size of the issuer’s needs, and business performance.
2. Maturity Period
The maturity period of bonds is in the range of 1 year to 10 years. Usually the maturity of bonds is at least 5 years. However, there are also bonds whose maturity era is 10 years, 15 years, let alone 30 years. Most lenders prefer short-term bond investments over long-term ones. This is because it is recognize that short-term bond investments have a smaller level of risk.
3. Asset Claims and Company Revenue Claims
If at any time the issuing party experiences bankruptcy and default, the only liability that can be carrie out is to sell the issuer’s assets/ assets. After that, give the proceeds of the sale to you as a bond holder.
Claims on assets, namely you will get the right of claim to take precedence when there is a sale of assets. While claiming on the company’s income, it means that you are a bondholder and have the right of claim to take precedence over other dividends.
4. Coupon Rate
In bond investment, you will get coupons periodically at a time that has been determine by the issuer. The coupons here are just similar to the interest you will get. Coupon protection time can be every 1 month, 3 months, 6 months, more-plus 1 year.
It depends on the agreement between you and the bond issuer. Usually, the amount of the coupon is already determine at the beginning of the bond agreement. The existence of this coupon, is the same concept as the return you get when funding at Koinrobo from Koinworks.
The amount of yield on Koinrobo, has also been predicte in advance, which is between 4 percent and 13 percent per year. Of course, in Koinrobo the longer the timeframe you choose in funding, the greater the return. Not only that, by funding in Koinrobo you also contribute socially, you know.
5. Indenture (Contract)
In bond investment, there is an indenture or contract between the bond issuer and the bondholder’s representative (Trustee). This contract contains the rights and obligations of the issuer and bondholders. In the bond contract, there are also provisions and restrictions designe to protect you (as a bondholder). Such as embargoes on the purchase or sale of fixe assets of the company, embargoes on the sale of company receivables, restrictions on withdrawing additional loans, and restrictions on dividend payments.
6. Current Yield
Current Yield is the profit from the coupon (Interest) you receive for one year at the bond price. It can be said, that the current yield is calculate base on the year interest on the bond price, the result will be in the form of a rate (Percent). There is another thing calle Yield to Maturity, which is the level of return you will get if you hold the bond until the maturity time.
In bond investments themselves, there is a rating that reflects the risk of bonds. Bond ratings usually consist of two or three letters accompanie by symbols or numbers, for example Aaa, Aa+, Aa-, Bbb+, and so on. The higher the rating, the lower the interest offere and the smaller the risk.
The ranking is run by the rating forum. Factors that influence the rating are the company’s profit, the level of certainty of income, the proportion of capital in debt, the size of the company, and so on. The ranking is not only owne by bonds, the peer-to-peer lending funding product, Koinp2p from Koinworks, also has a ranking platform.
The selection of this rank can be chosen by the Lender when funding a loan, the selection depends on the Lender himself. It doesn’t matter if the Lender wants to fund at a small risk, but the Lender must be willing to accept low returns.
On the other hand, if lenders want to get high yields, then the risks are also great. As for Koinp2p from Koinworks, it is suitable for beginners who want to study investment fundamentally, because the working platform is actually similar, you know. Funding in p2p lending indonesia at Koinp2p from Koinworks, you can get an effective return of up to 18 Percent per annum.
Types of Bonds
1. Government Bonds
Government bonds are usually issue by the Ministry of Finance and offere to residents with the aim of funding the government’s state budget. Government bonds are very conducive debt securities because they are guarantee by a country’s economy.
Bonds that are usually issue by the government on a regular basis include Indonesian Retail Bonds (Ori) and Retail Sukuk (Sr). Usually these bonds will be sold in various scattere government distribution partners, including Koinbond from Koinworks. Yup, through Koinbond dair Koinworks, you can buy Bonds and other Government Securities (Sbn) issue by the government as investment instruments.
2. Savings Bonds
Finally there are savings bonds that are bought by individual investors. And this is why these bonds are issue in such a low amount to make them affordable for individuals.
3. Fixe Interest Rate Bonds
Just as the name suggests. This bond offers an interest rate of a fixe amount and is paid periodically throughout the life of the bond.
4. Floating Interest Rate Bonds
Or also known as a Floating Rate Note (Frn) has an interest rate that refers to a money market index.
5. Interest-Free Bonds
Bonds known as Zero Coupon Bonds are bonds that do not provide additional interest payments. These bonds are trade with the help of discounts. And bondholders will receive the principal of the debt in full at maturity.
6. Inflation Bonds
Inflation bonds are bonds where the principal value of the debt on the bond will refer to the inflation index. The interest rate to be earne is usually much lower than that of fixed-rate bonds. With the growth of the principal value of debt along with inflation, the repayment of bonds will increase.
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7. Corporate Bonds
Bonds issued by all companies and bonds of this type are more risky than bonds issued by the government. This is a factor in why this type of bond offers a higher rate of return.
Well, those are some reviews that are passionate about how to invest in government bonds. Hopefully the discussion above will be useful and thank you.