At this time, you must be hearing more and more about the recession potential in 2023. This recession potential came from the slowing economy of several major countries in the world, so it is feared it will result in a global recession and impact other countries including Indonesia.
The cause of the economic slowdown in major countries is caused by inflation or it could also be due to deflation. In addition, the increase in interest rates carried out simultaneously by the central banks in these countries also triggered an economic recession.
Plus the post-pandemic impact after the last two years in the whole world. Not to mention the increasingly heated political situation between influential countries. These conditions lead to negative economic growth. When a country's economy grows negatively for two quarters, an economic recession occurs.
Then, what about investing amid this potential recession? You don't need to worry because if you invest with the right type of Bonds, then you can face the 2023 potential 2023 recession calmly. Check out the explanation below to find out more.
The Importance of Investment amid Recession
Many people are starting to panic at hearing the news of a potential recession in 2023. A lot of people quickly withdraw investment funds in order to secure personal financial. Actually this is not necessary because investing in the middle of a recession is very important. Here's why:
- Maintain Purchasing Power
As mentioned above, a recession is a condition in which the country's economy deteriorates to a negative value. This is related to the people's decreasing purchasing power.
If we decide to invest, then we can maintain purchasing power. By maintaining purchasing power, we can indirectly prevent the country's economy from declining and even protect it from a recession.
- Fighting the Challenge of Rising Prices
One of the factors causing the 2023 recession is inflation or rising prices of goods. This price increase lead to sluggish consumer activity and in turn the economy.
Therefore, we need to fight the challenge of rising prices as much as possible by continuing to invest. By fighting these challenges, we can indirectly maintain the economy like the previous point.
- Less Impact to Indonesia
Several experts stated that even though the world is being threatened by a global recession, it is not certain that Indonesia will be significantly affected because Indonesia's macroeconomic situation is relatively better than the big countries with looming recession threats.
Therefore, investors are still advised to stay invested even though the potential for a global recession is still looming. Moreover, investors can gain many investment benefits.
- Impact of Investing for the Future
The potential for a global recession is often talked about. However, we do not yet know whether this recession will last long or not, and whether the impact on our country and our lives will be significant if it does exist.
Instead of estimating things that are out of control, it is better to do something that we can control and have the potential to have a good impact in the future, namely investing.
Benefits of Investing in Government Bonds
From the explanation above, we can see that even though there is a potential for a global recession in 2023, investors should stay invested. However, investors still have to choose a safe investment wisely. One of them is Bonds.
There are various types of Bonds offered in the market. For example, you can choose the investment from a trusted Bond issuer, namely the government. Why is that? Here are the reasons:
- Relatively Safer
Government Bonds are still considered safer than other types of investment, for example stock investments which are at a higher risk. This is because Government Bonds have been regulated in Indonesian law.
The law is Law Number 24 of 2002 concerning State Letters. In this law, the safety of Government Bond investors has also been guaranteed by the state.
- High Yield Potential
With yield, investors can estimate the return they will gain when investing in Bonds over a certain period of time in the form of a percentage. The yield value itself is inversely proportional to the Bond price.
Even though the yield value can change due to the influence of Bond prices, the Government Bond yield is considered relatively higher than other types of investment. In addition, during a recession, an increase in interest rates set by the central bank has the potential to increase yields.
- Fixed Interest Rate
It has been mentioned above that Government Bonds are influenced by the benchmark interest rate set by the government. This interest rate affects Bond prices, so it also affects yield you gain. Indirectly, fixed interest rates free you from the worry about fluctuating yields while investing in Government Bonds.
- Monthly Paid Coupons
The government is obliged to pay coupons regularly, namely every month. This lasts as long as investors stay invested in Government Bonds until maturity. Under these provisions, Government Bond investors have the opportunity to consistently earn passive income.
- Support National Economy
Previously, it was mentioned that investment is closely related to strengthening purchasing power. Strengthening purchasing power also means strengthening national economy.
However, Government Bonds can also further strengthen national economy because the funds raised from the sale of these bonds are used by the government to finance the state and reduce the state budget deficit.
One of the impacts of the strong economy and the existence of state financing is the improvement of national development. If national development improves, the state can raise employment opportunities which affect the improvement of the country's economy
Things to Look For When Investing in Government Bonds
Before starting to invest in Government Bonds, you should first know things related to government-issued Bonds. Some of them are:
- Recognize the Types of Government Bonds
First, identify the types of Government Bonds. The investment instruments that you can choose consist of Sukuk Ritel (SR), Sukuk Negara Tabungan (ST), Obligasi Negara Ritel Indonesia (ORI), and Savings Bond Ritel (SBR). The debt securities named sukuk are Sharia-based state securities.
- Recognize the Risks
Even though Government Bonds are considered safer than other types of investment, there are still risks that you need to be aware of. The first risk that can occur is liquidity risk, which occurs when investors have difficulty selling Bonds on the secondary market because the Bonds are sold before the maturity date.
The second risk is the potential loss that may occur when the market price drops. This is also the impact of selling Bonds before maturity. Therefore, you should not rush to sell Bonds. Also keep in mind that Bonds are medium-term investment instruments, not short-term.
- Observing Rising and Falling Bond Prices
Bond prices can also experience ups and downs due to inflation. Pay attention to the rising and falling trends. Because your decision to sell and buy Bonds depends on market conditions.
When the price goes down, buy Bonds or hold the Bonds you have already bought. Because selling Bonds when the price drops will only hurt you. Conversely, when Bond prices tend to rise or normal, sell Bonds so that you gain the maximum profit.
- Perform Investment Diversification
You also don't need to hold back from diversifying your investments during a recession. Place your wealth funds in various types of investments. So that when one type of investment experiences a decline or loss, there are still other investment instruments that are relatively safe.
You can choose gold, Deposits, or stocks. Adjust to your financial situation and risk profile. For Government Bonds, aside from being a medium-term investment with a profit potential, you are also involved in efforts to maintain the stability of national economy. Especially in times of economic recession.
Bond Type Investment with DBS Treasures
Investors can easily hesitate when making the decision to invest amid a potential economic recession. The solution is that you need a wealth management partner who can support you in managing your investment funds. You can entrust your investment funds to priority banking DBS Treasures.
DBS Treasures can become a partner in investing in Bonds comfortably and safely. You can also diversify your investment by placing your funds in various investment portfolios, one of which is Bonds.
By investing in Bonds, you will gain the convenience of investing as well as various other benefits. Here are some of the conveniences you can gain:
- Regular Coupons
The Bonds available at DBS Treasures provide regular coupons for you. These coupons are regular income that you will earn periodically as long as you invest.
- Capital Gain Potential
Gain attractive profits from rising Bond prices by selling several types of Bonds that you acquire on the secondary market before maturity.
- Competitive Coupons
You also have the opportunity to gain competitive coupons which value can be higher than the average Fixed Deposit interest.
- No Additional Fees
Bond investment is free of additional fees, you only need to pay the spread or the difference from buying and selling prices.
- 24/7 Transaction
You can carry out every transaction using the digibank by DBS Application because it comes with comprehensive investment features.
So, you can invest anytime and anywhere only through the digibank by DBS Application. The application is also user friendly so that it is easy for users to operate.
There are many features that you can use, such as buying and selling Bonds, and registering for a Single Investor Identification (SID). With all these conveniences, you can access and monitor Bond investments anytime and anywhere.
Join as a priority banking customer and enjoy easy investment transactions with DBS Treasures. You can start investing with a minimum placement of IDR 500 million.
You will also gain personalized wealth management strategy updated to you regularly. So you can confidently make accurate decisions at the right time.
Find more information by visiting the following page https://www.dbs.id/id/treasures/investasi/structured-product/investing-in-bonds
