Bonds are one of the investment instruments that are popular among the public. Among the types of Bonds in Indonesia, Government Bonds are still the choice of most people. This is due to the various advantages for the investors.
However, before starting to invest in this instrument, you need to know what Government Bonds mean and the benefits for you as an investor. Apart from that, you also have to know whether you are suitable to invest in this instrument. Read more below.
What are Government Bonds?
Bonds mean debt securities. These debt securities are issued by various institutions such as the central government, regional governments, and corporations, depending on the type of the Bonds. As the name implies, this type of Bond is issued by the Indonesian government.
The government issues Government Bonds so that the public can participate in funding the country's economy. The funds will be collected in the APBN which can later be used as a source of funding for various development projects in Indonesia.
In exchange, the Indonesian government will offer various benefits to investors of this type of Bond. You can find out these advantages below.
What Benefits Do Investors Gain?
To know more about the form of profits from investors, here are the various benefits that investors will get:
Investors will receive income in the form of coupons every month. For Bond investors from the government itself, there are two types of coupons that can be obtained depending on the product. The two types of coupons are fixed rate and floating with floor.
Fixed rate coupons have a fixed interest rate each month so they are safer from fluctuations. This interest rate is also higher on average than bank deposits in general.
Floating with floor coupons have interest rates that change according to Bank Indonesia interest rates. However, there is a minimum limit so that the interest rate cannot fall below this limit.
Bonds from the government are considered to have lower risk than other types of instruments, even from other types of Bonds. This is due to the laws regarding Government Bonds, so that investors will be protected by these laws.
The benefits of legal protection can directly affect investors. One of them is that there is no risk of default on both the coupon and the principal value of the investment at the end of the period. In contrast to other Bonds that still have this risk due to uncertain financial conditions.
Opportunity to Get Capital Gain State Bond investors will have the opportunity to obtain capital gains. This capital gain potential will certainly bring benefits to these investors.
Can Become a Loan or Collateral This type of Bond can be used as collateral or a loan to other parties according to the agreement made by the investor. This is made easy because there is no physical certificate as a proof of ownership or scripless.
Supporting Country Development By investing in state Bonds, investors will participate in helping the country's development. This refers to the main purpose of issuing these types of Bonds by the government, namely as a source of funding for the Indonesian economy.
Investment Value Starting at IDR 1 Million For novice investors who want to try this type of Bond, they can start investing with only IDR 1 million per unit. But they can also invest up to billions if they really want to.
There are Government Bond products such as ORI which can be traded on the secondary market prior to maturity. This certainly makes it easier for investors to invest, especially among domestic investors.
Even though not all products have it, there are other products such as SBR which have early redemption facilities. This facility allows investors to apply for a maximum return of investment value of 50% in a certain period of time before maturity.
Who is Suitable to be an Investor?
There are several types of people who are suitable to be investors in Bonds issued by the government. Are you one of them? Here's the run through:
Millennials or Generation Z If you are a millennial or generation Z, then you are suitable to be an investor in this instrument. There are a large number of people from both generations who are investing in this type of Bond. In fact, this trend is predicted to continue to rise.
In addition, now this investment instrument is also easily accessible on smartphone applications. That is why they prefer to invest in Government Bonds.
People who Plan Pension Fund The trend of planning for retirement funds is increasing along with increasing public awareness to secure finances in old age. Therefore, they also began to think of various ways to save some of their income for retirement funds, such as investing.
As mentioned above, investment in Bonds from the government has minimal risk. If you are planning a retirement fund, you are a suitable investor to use this investment instrument without worrying about the various risks that exist in other investments, such as default.
People with Short and Long Term Plans Some people think that we should manage finances well so that they don't just run out. We also need to set aside some of our income so that we can fulfill our short-term and long-term plans
If you are someone who thinks the same way, then you can use Bonds from this country to invest so that your income is not just spent in consumptions.
The coupons can also be passive income and can be used to fulfill your plans, both in the short and long term.
People who are Learning to Invest If you are learning how to invest, you can use this type of Bond because of the minimal risk involved. You can also start with a low investment value when you want to try it.
Invest with DBS Treasures
Above, you already know what the meaning is, the benefits of Bonds from the government, to who is suitable for investing in this instrument. If you are interested to start investing with this type of Bond, then priority banking DBS Treasures is ready to be your partner. DBS Treasures will also offer various benefits, such as:
Gain a coupon with an interest rate above Fixed Deposits in general Opportunity to get capital gains There is also regular income in the form of coupons which are paid regularly during the investment period Does not require additional costs Easy transactions through the digibank by DBS Application anytime and anywhere Gain guidance through curated insight analyzed to market data and your profile so you can confidently invest at the right moment You will only gain the various benefits above if you invest in Government Bonds with DBS Treasures. Therefore, click here now to find the comprehensive information.
