In investing, you want to gain profit, including in Bond investment. All Bonds has the potential to be profitable, but there are many factors that influence it.
In choosing Bonds, you shouldn’t focus only on big profits. There are several factors to consider, such as investment objectives, investment period, suitable types of Bonds, interest rates, and others.
5 Tips for Choosing Bond Types for Profit
To make investing more optimal, you can apply some tips on choosing profitable Bonds as follows.
- Understand the Types of Bonds that Match the Investment Target
The main thing you need to pay attention to is to understand the investment products first. Just like when you have to know a product before making the decision to buy it, from the product content, benefits, manufacturers, expiry date, and others.
You also need to know the many types of Bonds. Different bonds have different systems, so you should be able to differentiate between them before buying these Bonds.
Make sure the information you get regarding the definition of Bonds and their types comes from trusted sources such as major media, government websites, and others. This is to minimize misinformation that can harm yourself in investing.
Study this information properly because your understanding will be very helpful when starting to choose these Bonds and invest in them. That way, you don't invest rashly or get scammed.
- Determine the Right Time to Invest
Time is a crucial factor that can determine the amount of investment. If you buy Bond assets at the right time, there is a great chance to make a lot of profit. However, you can also experience large losses if you don't choose the right time when investing.
The simple definition of a Bond is an investment in the form of debt securities issued by a certain institution. In this case, investors are free to buy Bonds as long as they know the right time.
Many are interested in buying Bonds on the secondary market. This is because Bond investment in the secondary market has the potential to be profitable through capital gain.
- Monitor Interest Rates
The important thing to remember is any Bond will be influenced by the value of the interest rate. Yields on these Bonds are inversely proportional to the value of interest rates.
If interest rates fall, Bond profits have the potential to increase and vice versa. Therefore, as explained in the previous point, you must pay attention to the right time to invest in Bond.
- Know the Debt Issuer
The definition of a Bond is a debt instrument to the issuer that you must be familiar with. Know the track record of the issuer to make it easier for you to choose a profitable Bond.
Especially if the Bond issuer comes from outside the government, such as a private company. The reason is because vulnerable companies are at risk of failing to pay their obligations or experiencing defaults to the detriment of investors.
For Bonds issued by the government, you don't need to worry about this problem. In general, all the provisions of the Bonds have been guaranteed by the Law and the system has strict governance.
In addition, make sure the Bond issuer is registered and has permission from the Financial Services Authority (OJK). These tips prevent you from getting easily trapped in fraudulent investments and stay wary of investment offers with instant profits.
- Set Strategy and View Market Conditions
Even though investing doesn't add to your workload, it’s still not easy to do because it requires skill and knowledge in setting the right strategy. Strategize based on goals, risk, time, and so on.
It will also be easier to formulate a strategy if you observe market conditions, especially monitoring interest rate movements. Interest rates can change at any time because they are easily influenced by the country's economic and political conditions.
Therefore, you must keep up with the latest news every day because this is related to market conditions or economic stability at that time. Usually, when economic conditions are stable, the risk is also smaller.
Reasons for Choosing the Government Bonds Type
Many of these Bonds are chosen because the risk is minimal. However, there are also several other benefits that you can get if you choose this type of investment.
- Gain Regular Coupons
Government Bonds offer regular coupons or interest within an agreed timeframe. Usually, the distribution of coupons is done once a month, three months, or every six months.
- Capital Gain Potential
If you buy Bonds at a low price, then sell successfully with a high price, it is called a capital gain. This is a potential profit that you can gain by selling Bonds to general investors in the secondary market.
- Return of Principal Value at Maturity
In general, the risk of failing to return the initial capital by the Bond issuer is relatively small, although it still exists. This risk only exists in Corporate Bonds, while the Government Bonds are safer and guaranteed by Law.
- Relatively Bigger Profits Than Deposit Interest
Another reason is that Government Bonds offer relatively higher coupons compared to the average Fixed Deposit interest rate. Of course, this is also a major consideration for investors if they want to make a lot of profit.
- Can Be Used as Collateral
Another advantage, you can also use Bond as collateral to obtain a loan from a bank. Not only that, it is also possible to buy shares on the Stock Exchange so that the profits from the Bonds can be multiplied.
4 Ways to Buy Bonds
After understanding the previous explanation, apply the tips and follow the guide on how to buy Bonds.
- Set Investment Goals
Start by determining your investment goals so that you have a clear target you want to achieve. This will also make it easier for you to choose the type of Bond that suits your investment objectives.
In determining investment goals, you can adjust them to life targets or aspirations. For example, investing to raise funds for building a house, buying a car, saving for old age, and more.
Also add the time period for achieving the investment goal because there are several types of Bonds that pay interest or principal value in the short or long term.
- Determine the Investment Platform
Purchase of Bonds nowadays is very easy because there are many investment platforms with such capabilities. Choose the type of investment platform that is safe, verified by the Financial Services Authority (OJK), and has guaranteed credibility.
Always note to avoid the temptation of investment platforms that offer profits in a short time, with small capital, and so on. Even more so if offered from unknown people such as through social media, for example.
This has the potential to be a scam. Instead of buying this type of Bond, you are trapped so that you experience losses. Incidents like this have also been experienced by many victims out there.
- Account Registration and Verification
If you are sure of the type of platform to use, then just create your investment account on that platform. Also, read the terms and conditions of the platform's work system first so you don't get confused in operating it.
- Buy Bonds at the Right Time
Next, understand the types of Bonds and all information regarding them. Then monitor the market and see potential Bonds to buy. When the time is right, immediately make a purchase by following the procedures on the investment platform.
DBS Treasures: Easy, Practical, and Trusted Bond Investment
If you are looking for an investment partner, especially Bonds, then DBS Treasures is the right wealth management partner. Priority banking provides many conveniences for investors. Here are a number of advantages that you can experience when you choose DBS Treasures as your wealth management partner.
- Payment of Regular Coupons
Bonds at DBS Treasures offer regular coupons. Regular coupons are income that you can get during the investment period and will be paid throughout a certain period of time.
- Potential to Achieve Capital Gains
Gain potential profits by selling the Bond assets you acquire on the secondary market before maturity.
- Opportunity to Gain 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
The Bond investment is free of additional costs, you are only charged the spread or the difference from buying and selling.
- 24/7 Transaction
You can carry out every transaction using the digibank by DBS Application because there are comprehensive end-to-end features for investing.
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.
Those are the tips on choosing profitable types of Bonds and you can prove the benefits yourselves. Investing in Bonds is quite simple as long as you understand the basics regarding Bonds, the work system, and the flow.
In addition, many people think that investments can bring profits in a short time. It is true that this can happen, but it also depends on the type of investment and the strategy.
There are times when the value of the investment soars because of certain factors that affect market conditions at that time. However, what one should definitely pay attention to is the selection of a suitable wealth management partner.
Based on the explanation and various advantages provided by DBS Treasures, it can be considered the right partner so that you can invest confidently. Moreover, the investment can be done with access from a cellphone. You can find complete information here.
