For those of you who are just starting to get to know the world of investment, you may have often heard about stocks or mutual funds. Did you know that besides stocks or mutual funds, there is also an investment instrument known as retail bonds? This investment instrument is an attractive choice for those who want to invest with more measured risk and fairly stable returns.
Retail bonds can be described as lending money to the state in return for agreed-upon interest. This investment instrument is intended for beginner investors who want to learn to build a portfolio safely.
So what is meant by retail bonds? In this article, we will discuss retail bonds further, from the definition, benefits, to tips for investing in retail bonds.
Key Takeaways:- Retail bonds can be described as lending money to the state in return for agreed-upon interest.
- Retail Government Bonds or ORI are one of the Government Securities (SBN) instruments specifically intended for individuals or Indonesian citizens.
- Government Securities consist of Government Debt Securities and State Sharia Securities.
What are Retail Bonds?
Referring to Minister of Finance Regulation Number 36/PMK.06/2006 concerning the Sale of Retail Government Bonds in the Primary Market, Retail Government Bonds are government bonds sold to individuals or individual Indonesian citizens through selling agents (Minister of Finance, 2006).
Retail Government Bonds or ORI are one of the Government Securities (SBN) instruments specifically intended for individuals or individual Indonesian citizens. Government Securities consist of Government Debt Securities and State Sharia Securities. You can buy retail bonds in the primary market, when first offered by the government, or in the secondary market if you want to buy or sell them after the initial offering period ends.
Through ORI, the government borrows funds from the public, and in return the government will pay fixed interest (coupons) every month for a certain period. After maturity, the principal funds you invested will be returned in full.
Retail Bonds are one of the investment options suitable for those who want to invest with lower risk compared to stocks, but still get definite returns. In addition, ORI is also part of the government's strategy to invite the public to contribute to state financing. In other words, you are not only investing, but also helping to build the nation.
Benefits of Retail Bonds
Retail Bonds are debt securities issued by the government and specifically intended for individuals or individual investors, not for large companies. So, you as a private investor can buy these bonds with relatively affordable capital. ORI are issued and offered through Distribution Partners in the Primary Market with an increasingly easy and practical purchasing system.
Currently, the government is reopening opportunities for the public to invest through ORI series ORI027T3 and ORI027T6. These two series are the fifth ORI offering two tenor options with transaction processes that can be done online through the e-SBN platform. Besides being safe and affordable, ORI also offers a number of attractive benefits for those who want to start investing.
Here are some benefits you can get if you invest in retail bonds:
1. Coupons and Principal Guaranteed by the Government
One of the main advantages of ORI is the government guarantee for coupon payments and return of investment principal. This guarantee is officially regulated by Law, providing peace of mind for those who want to invest without worrying about default risk.
2. Purchase Price Available from Distribution Partners
ORI has a fairly good level of liquidity because there is a bid price offered by Distribution Partners or other parties who cooperate with them. This makes it easier for you if you want to sell your ORI at any time.
3. Coupons Higher than Deposit Interest
ORI investment offers coupon rates that are usually higher compared to the average deposit interest at state-owned banks. This is certainly an attractive opportunity for those who want to get more optimal returns with maintained risk.
4. Potential to Get Capital Gain
In addition to getting monthly coupons, ORI also provides opportunities for investors to gain capital gains, namely profits from the difference in selling price that is higher than the purchase price, if you decide to sell it in the secondary market.
5. Fixed Coupons Until Maturity
ORI coupons are fixed during the investment period. With an unchanging interest rate, you can enjoy certainty of monthly income until maturity.
6. Can Be Used as Collateral to Other Parties
ORI can be used as loan collateral to third parties, in accordance with the provisions applicable at each Distribution Partner. This provides additional flexibility for you in managing investment assets.
7. Coupons Paid Every Month
One of the attractive advantages of ORI is coupon payments made every month. With this periodic payment system, you can get regular cash flow that can be used for other needs.
8. Can Be Traded in the Secondary Market
ORI has flexibility because it can be traded in the secondary market between domestic investors or through trading platforms such as Electronic Trading Platform (ETP). That way, you don't have to wait for maturity if you want to liquidate your investment.
9. Contribute to National Development
By buying ORI, you are not only investing for personal gain, but also participating in supporting state development financing. Funds collected from ORI will be used by the government to finance various national projects that benefit the wider community.
How to Invest in Retail Bonds
Investment in Retail Government Bonds (ORI) such as ORI027T3 and ORI027T6 is increasingly popular because the process is easy and practical. For those interested in starting ORI investment, there are several important steps you need to follow to ensure the process runs smoothly.
Here are the stages you can take to ensure your retail bond investment goes well, quoted from the Ministry of Finance, Directorate General of Financing and Risk Management (Ministry of Finance, n.d.).
1. Register First
The first step you must take is to register. This registration can be done at any time, even before the retail SBN offering period opens. You simply register through the online system provided by Distribution Partners (Midis) by completing your personal data, SID (Single Investor Identification) number, fund account number, and securities account. If you don't have a SID, fund account, or securities account yet, don't worry, you can directly contact the Distribution Partner to get further guidance.
2. Place Your Order at the Right Time
After the registration process is successful, the next step is to place an order for the ORI you want, either retail series ORI027T3 or ORI027T6. Before ordering, make sure you have carefully read the information and terms stated in the Information Memorandum. It's important for you to know that orders can only be placed during the offering period, so don't miss it.
3. Make Payment Immediately
After your order is verified by the system, you will receive a payment code (billing code) which is usually sent via email or SMS, depending on the policy of the Distribution Partner you choose. Use that code to make payment through a perception bank, either through teller, ATM, internet banking, mobile banking, post office, or other receiving institutions, and make sure you complete the payment according to the specified deadline.
4. Make Sure to Get Confirmation
After you complete the payment, you will receive proof in the form of NTPN (State Revenue Transaction Number) and notification that your order has been successful (completed order). On the issuance or settlement date, the ORI allocation you purchased will be recorded in your name. To ensure ownership, you can request Proof of Ownership Confirmation for ORI027T3 and ORI027T6 from the Distribution Partner you use.
Conclusion
Investment in Retail Government Bonds (ORI) can be a smart step for those who want to get stable profits with relatively low risk. Besides providing certainty of returns and capital gain opportunities, ORI also offers you the opportunity to contribute to national development. With an increasingly easy purchasing process and practical online system, ORI is now more accessible to everyone.
Interested in starting to invest in retail bonds? BTN provides retail bond purchasing services, including Retail Government Bonds (ORI) and Retail Savings Bonds (SBR) that can be easily accessed through the BTN platform. Through BTN, you can invest practically, safely, and comfortably.
Want to know more? Visit this link to learn about other investment products offered by BTN.
