Now there are many people from various generations who are literate about investment. Talking about investment, one of the instruments that is generally in demand by the public is stock investment. Even so, investments can not only be made in stock instruments but also in several other types such as Government Bonds.
Touching on Bond-type investment instruments issued by the government, on this occasion we will explain the differences between this type of Bond and stock investment instruments.
However, before discussing the differences between the two instruments further, in order to understand better, you need to know in advance about the concept of investing in Bonds and their examples. Details regarding this discussion will be explained in the following points.
Know the Concept of Bonds
Bonds are one of the instruments that can be an option for people who want to invest. In simple terms, the concept of investing with Bond instruments is trading debt securities. These debt securities transactions generally have their own period or timeframe, starting from medium-term and long-term debt securities.
These Bond instruments are divided into two types based on the institution that issued the debt securities, namely Bonds issued by corporate institutions or companies and Bonds issued by government agencies.
Even though this investment instrument is less popular, Bond type investments are generally in demand because they have guaranteed protection which will certainly make the investment process safer.
When choosing to invest in a Bond instrument, there will be an agreement that must be agreed upon by all parties involved, such as the amount of funds, the amount of interest or coupons, and the length maturity period.
Bond Investment Examples
After understanding the concept of Bond instruments, the following will discuss examples of this type of investment. Some examples of Bond type investments that are commonly found in the capital market include:
- SUN (Surat Utang Negara)
The first example that you need to know when you want to invest in Bonds is Surat Utang Negara (SUN). As the name implies, this Bond is issued by the government.
This SUN will be issued in accordance with the provisions based on Law Number 24 of 2002.
- Corporate Bonds
The second example that you can also find from a Bond type investment is Corporate Bonds. This Bond is issued by corporate institutions including BUMN and also BUMD institutions.
- SBSN (Surat Berharga Syariah Negara)
The next example of Bonds is Surat Berharga Syariah Negara (SBSN). These Bonds will be issued under conditions based on Law Number 19 of 2008 concerning Surat Berharga Syariah Negara (SBSN).
The concept of the SBSN Bonds is that they are issued by government institutions based on Islamic religious sharia.
- Corporate Sukuk
Then there is also Corporate Sukuk Bonds. In Corporate Sukuk, this investment instrument will be issued adhering to the sharia concept which is adjusted to the state standards by the Capital Market Supervisory Agency (Bapepam).
Not only that, the issuance of this investment instrument also needs to be adjusted to the provisions of LK Np. IX.A.13 which discusses Sharia Securities.
- EBA (Asset Backed Securities)
Next is another example of Bonds, namely Asset Backed Securities (EBA). The concept of this EBA instrument, among other things, is a securities that have a debt nature and are issued with Underlying Assets.
Those are some examples that you can choose if you are interested in trying to invest in Bonds. The most important thing when you want to invest in this instrument, you need to do research first regarding everything so that the investment you make can gain profits instead of losses.
Differences between Government Bond Instruments and Stocks
After discussing the concept to examples of investment instruments that deal in trading debt securities, we will return to the initial discussion regarding the differences between investing in Bonds and stock instruments.
So what's the difference between the two investment instruments? Seen from several aspects, the differences between Bond and stock instruments include:
- Function Aspect
The first difference between Bond and stock instruments can be seen in terms of their function. Bond instruments are a proof of ownership of receivables while stock instruments are a proof of ownership of a part of the company.
- Timeframe Aspect
The next difference from Bond and stock instruments is based on the aspect of the time period. In Bond instruments, this investment has a medium term to long term. So that when the period is over, the debt certificate is no longer valid.
Meanwhile, it is different from stock instruments which do not have a validity period. So as long as the stock instruments you own have not been sold, the proof of ownership of some of these companies is still valid.
- Profit Aspect
The benefits that will be obtained from the two types of investment in Bonds and stocks are also different. If the profit earned on Bond instruments is based on the amount of interest or coupons that have been agreed upon, it is different from stock instruments which depend on the company profits.
The shareholder's profit will be greater if the company's profits are large, but the profit will decrease along with smaller company profits.
- Price Aspect
Price can also be the difference between Bond instruments and stock instruments. The level of volatility or statistical changes in prices that go up and down within a certain period in stock investments tends to be higher than in Bond instruments.
Start Investing in Government Bonds with DBS Treasures
From several explanations regarding investing in Bonds and the difference between them and stock instruments, are you interested in starting an investment with the concept of buying and selling these Bonds?
If you are interested, one of the right partners to try this Bond investment is DBS Treasures. Below are some of the advantages offered when you invest with DBS Treasures priority banking.
- You can gain income in the form of coupons that are paid regularly
- You can get capital gain opportunities
- You can gain a coupon rate above the interest on Fixed Deposits in general
- There are no additional costs other than the spread, which is the difference between the buying price and the selling price
- All Bond transactions can be accessed 24 hours non-stop via the digibank by DBS Application
Opportunity to be supported by curated market analysis communicated by a team of financial experts. Gain the latest opportunities that have been adjusted to your risk profile and portfolio needs, driven by Artificial Intelligence/Machine Learning (AI-ML). This insight is equipped with curated solutions related to investment (Grow) and insurance (Protect), so you can quickly and confidently invest through your preferred media.
If you are interested in investing with DBS Treasures, you can find a more comprehensive explanation regarding Government Bond instruments by clicking on the official website at the following link https://www.dbs.id/id/treasures/investasi/structured-product/investing-in-Bonds.
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