In recent years, bond investing has become increasingly appealing as a fixed-income instrument. This trend has emerged as many investors look for alternatives beyond stocks while still seeking attractive potential returns with more predictable risk profile. .
This article provides a complete guide on what bond investing is, the different types of bonds, and tips to help you get started with more confidence while minimizing risks. Read on until the end!
What Is Bond Investing?
Bond investing is a method of investment by lending your money to an issuer, either the government or a corporation, for a specific period. In return, you receive regular interest payments, and your principal is returned once the bond reaches maturity.
Common examples include government bonds such as ORI (Obligasi Ritel Indonesia) and SBR (Savings Bond Ritel), as well as corporate bonds issued by private companies.
How Bond Investing Works
When you invest in bonds, you provide funds that the issuer uses to finance projects, business expansion, or other operational needs. In return, the issuer commits to paying you interest, known as the “coupon”, regularly and returning your full principal at maturity.
For example, if you purchase a bond worth Rp10,000,000 with a 6% annual coupon for three years, you will receive Rp600,000 in interest each year. At the end of the three-year period, your Rp10,000,000 principal will be returned in full.
Key Advantages of Bond Investing
After understanding what bond investing is and how it works, here are its main advantages:
1. Fixed Income from Coupons
You receive regular interest or coupon payments at predetermined intervals. This is why many consider bonds a stable source of passive income.
2. Lower Risk Than Stocks
Bond prices tend to be more stable than stock prices, making them suitable for investors who want to protect their investments from sharp market fluctuations.
3. Can Be Sold on the Secondary Market
If you need funds before maturity, bonds can be sold on the secondary market, allowing your investment to remain liquid and easy to convert into cash.
4. Ideal for Portfolio Diversification
Adding bonds to your portfolio helps maintain balance, as bond returns can help stabilize risks from more aggressive instruments.
5. Suitable for Conservative Investors
If you prefer lower-risk investments, bonds are a safe option. Their fixed returns and lower loss potential make them suitable for medium - to long-term goals.
Risks to Consider in Bond Investing
Although relatively stable, bond investing still requires risk assessment before before investing :
1. Interest Rate Risk
Bond prices may decline when interest rates rise because investors tend to prefer newly issued bonds offering higher coupon rates.
2. Default Risk
This typically occurs with corporate bonds when the issuer fails to pay interest or repay the principal on time. Therefore, choosing credible issuers is essential.
3. Liquidity Risk
Some bonds are difficult to sell before maturity—especially those that are rarely traded. It’s important to have sufficient funds that you can commit to holding until maturity.
How to Start Bond Investing with Mandiri Sekuritas
At Mandiri Sekuritas, bond investing is safe, reliable, and beginner-friendly. Here are the practical steps:
- Open an investment account online via growin.id or Livin’ by Mandiri
- Choose the bond type that fits your financial goals
- Make a purchase with your preferred amount
- Monitor your investment progress
Start Building Stable Investments for Your Future
If you’re looking for a safe and stable instrument, bond investing is an excellent option for long-term financial planning. With more measurable risks and regular returns, bonds can help you achieve your financial goals with peace of mind.
Start your smart investing journey today with Mandiri Sekuritas! Register now and experience the convenience of secure, practical, and rewarding investments for your future.
