In the past few years, many investors have chosen to use Government Bonds or State Bonds in achieving their financial targets and goals. This can be seen from the increasing number of investors in the State Bonds asset class every year.
The relatively low interest rate has made investors switch from conventional products in the form of Fixed Deposits to State Bonds products. Not only that, the yield provided by this type of Bond product is also relatively higher. The tax rate on State Bonds is also lower when compared to Fixed Deposit products.
To find out more about Bonds issued by the government and tips you can do to gain maximum profits, see the full review in this article.
Know What State or Government Bonds Are
State Bonds or Government Bonds are debt securities issued by the state. As a whole, it can be said that the Bonds issued are legal to use. These debt securities are also legally protected by various regulations including laws, government regulations, to regulations from the Minister of Finance.
Because it is a type of debt that is legally protected, Government Bonds are considered the safest type of investment instrument from the risk of default. So it's no wonder that many investors choose to invest in this instrument.
Apart from investing in stock and money market products, Government Bonds can be the most suitable choice for you, especially if you have financial targets for the next 2 or 3 years.
When discussing the capital market, some people may still tend to discuss stocks. In fact, investing in the capital market does not only focus on the stock sector. The Government Bonds instrument has also become a favorite investment instrument for some groups, especially for investors of the conservative type.
When compared to investing in stock instruments, basically investing in Bonds instruments does not recognize ownership. This is because Bonds are a type of loan from investors to companies and the government as the issuer of these Bonds.
Government Bonds also have a nominal amount with a certain maturity. Even though they have a maturity date, Bonds can still be traded through the Bonds market.
What's interesting about investing in State Bond instruments is that the returns are above the average value offered by Fixed Deposit interest. It's no wonder that many investors also seek this instrument when allocating their budget.
With a high level of security, especially for Government Bond instruments, you can also have an investment principal and coupons that will be received periodically. Not only that, Investors in State Bonds can also obtain returns through Bond trading on the secondary market.
The potential for profitable returns from regular coupon receipts makes Government Bonds a stable and attractive type of investment instrument. Therefore, many people allocate their funds in Government Bonds for various needs such as education funds, weddings, home renovations, to buying dream items.
Types of Government Bonds
Before investing in Government Bond products, it's best if you understand each type of Government Bond first. For clarity, pay attention to the differences between each type of State Bond based on the following points.
- Conventional Government Bonds with IDR Currency: FR & PBS
Government Bonds with the FR & FBS series are a type of debt instrument issued by the state for a certain period of time with a fixed coupon. In this case, the Bond issuer has guaranteed a return of the principal amount at maturity plus a coupon which will then be paid periodically.
- Retail Government Bonds with IDR Currency: SR & ORI
The Indonesian Government Bonds with the SR & ORI series themselves are debt instruments issued by the Government for a certain period of time on the Domestic Primary Market. This Bond uses a fixed coupon, where the Issuer also guarantees a return of the principal amount at maturity. Not only that, there are also coupons that will be paid periodically to investors.
- Government Bonds in USD Currency: INDON & INDOIS
The Indonesian Government USD Bond Series INDON and INDOIS are types of debt instruments issued by the Government of the Republic of Indonesia within a certain period of time denominated in USD with a fixed coupon. In this case, the Issuer guarantees the return of the principal amount at the time of expiration which is then added using a coupon which will be paid regularly.
- Government Bonds with EUR Currency: INDONEUR
The Indonesian State EUR Bond Series or INDONEUR is a type of debt instrument issued by the Government of the Republic of Indonesia at a certain period of time in the EUR denomination with a fixed coupon.
In this case the Bond issuer has guaranteed the return of the principal amount at maturity, plus a coupon that will be paid periodically.
Tips on Investing in State Bonds to Make More Profits
As discussed in the previous discussion, Government Bonds are a type of investment instrument that is suitable for conservative investors. In addition to having a low investment risk, Government Bonds also generate profitable potential returns. However, you also need to apply some important tips to gain the most profit.
- Choose the Right Time to Make a Transaction
Basically, investing in the secondary market provides an opportunity for every investor to buy and sell Government Bonds anytime and anywhere. Today's all-digital era also makes it easier for you to manage when the buying and selling process will be carried out.
Because Government Bonds have the potential for quite profitable returns from transactions, you can make sales at any time. If you buy State Bonds at 100 percent, for example, you can sell them back at 105 percent.
These profits, of course, can be doubled if you sell them with the right calculations. If you really want a maximum return, then you can keep it longer so you can gain a steady income from coupons or interest.
- Keep Up with the Interest Rate
When you start investing in State Bonds, you need to know that the price of State Bonds is always inversely proportional to the value of interest rates and yields on these Bonds. Prices tend to fluctuate due to various factors including interest rates.
Generally, when the value of interest rates rises, the price of Government Bonds begins to decline and vice versa. Therefore, you need to determine the most appropriate time when you want to sell or buy Government Bonds. That way you can gain the maximum profit when you sell it at the right time.
- Choose Trusted Publishers
Bonds can indeed be issued by companies, the private sector, and the state. However, when viewed in terms of security strength, State Bonds generally tend to be safer because they are guaranteed by law. Not only that, State Bonds also have high yields with competitive interest rates.
If you are a novice investor and are still worried about the security level of each investment instrument, then feel free to place your assets through Government Bonds.
- Make Investments Online
Unlike the process of making investments in the old days, now you can make investments easily. Therefore, choose a more practical way of investing. Currently, various banking parties have provided Bond features on the secondary market through applications.
This investment application service will make it easier for every investor to make purchases, sales, payments, and other types of State Bond investment transactions. So, wherever and whenever, you can still make investments.
Easy Way to Invest in Bonds with the digibank by DBS Application
Investing with priority banking DBS Treasures can be the right choice in today's digital era. The digibank by DBS Application will certainly make it easier for you to make transactions. Below are the steps on how to invest using the digibank by DBS Application.
- First, create a Single Investor Identity or SID via the digibank by DBS Application if you don't have an account already.
- Next, choose between Primary Market Bonds if they are still in the offering period or Secondary Market Bonds.
- After that, determine the investment denomination you want in the form of IDR or USD.
- Choose the desired Government Bond product.
Advantages of Investing in Government Bonds with DBS Treasures
Here are some of the advantages that you can gain when investing with DBS Treasures.
- Regular Coupons
The Bonds available at DBS Treasures provide regular income in the form of coupons which are paid regularly during the investment period by the Bond issuer.
- Potential Capital Gain
Several types of Bonds can be sold at any time before maturity and gain potential profits from rising Bond prices.
- Competitive Coupons
Provides a competitive coupon rate above the average Fixed Deposit interest.
- No Additional Fees
Only the spread or the difference between the selling price and the buying price (bid and offer).
- 24/7 Transaction
There are a variety of Bond products that can be traded on the digibank by DBS Application.
Investing in Government Bonds is easier, safer and more practical with DBS Treasures. Invest now confidently with DBS Treasures, find out here for more information.
