Choose Stocks, Bonds or Deposits?
Having savings for some purposes in the future will give you a sense of security and comfort. Especially if existing savings are developed through several investment instruments such as gold, mutual funds, forex, bonds and deposits.
Of these investment options, bonds, stocks and deposits are types of investments that are safe and not complicated. For those of you who do not have enough time alias performance to manage assets in an active way so these three types of investments promise definite returns. These two instruments do not require special knowledge because investors only need to buy and look forward to the period of return on principal and return due to investment.
Investment activities in financial instruments are increasingly rife in Indonesia at this time. Investment instruments include stocks, bonds, deposits and so on.
New novice investors "dipping their toes" in investment activities sometimes do not understand the difference between these investment instruments. Stocks, bonds and deposits have their own unique characteristics.
Stock Investment
Shares are evidence of ownership of a company. In other words, an investor who owns shares of a company means owning a company. How many shares owned will distinguish the rights owned and will be accepted by every investor.
Bond Investments
Bonds are securities issued by both governments and corporations. Bonds are essentially issued as tutorials for raising funds for some needs.
By buying bonds issued by the state aka corporation you mean participating in the financing of certain projects organized by both the state and the corporation.
In bond investing, you will get multiple profits. In addition to regaining funds as much as the investment given when buying bonds, you will also get a return as a result of asset development.
The amount of yield obtained depends on the amount of interest agreed at the time of the initial bond purchase agreement. Not only when it is due, you are also able to get interest coupons in a planned way according to the agreement.
You can determine for yourself the bond product to be purchased. Usually more bonds are traded in the secondary market because they are able to make transactions anytime and anywhere. While in the initial market, you are only able to make purchase transactions at a certain time alias when the initial offering to the public (IPO)
There are various series of bonds that can be purchased in the secondary market that can be categorized in state bonds with conventional IDR (FR) exchange, as well as state bonds with USD (INDON, INDOIS) exchange. FR and INDON series bonds are issued by the Indonesian government within a certain period of time with a fixed coupon.
The transaction value of various bonds can be changed and adjusted to the budget that is owned starting from Rp 1 million aka USD 1,000.
Deposit Investments
Having a deposit is almost the same as having savings in the bank. It's just that deposits are deposits in banks that deposit and withdraw money can only be done within a certain time. Deposits consist of term deposits and on-call deposits that have a short period of time.
Deposits are a safe tutorial for saving money. Instead of being stored at home, by depositing deposits to the bank you will avoid the risk of theft. Moreover, deposit deposits in the Bank are deposits guaranteed by the Deposit Guarantee Agency (LPS) up to Rp 2 billion.
Placing money in the form of deposits has a relatively low risk of loss compared to placing money in the stock market. Deposits are not affected by market movements with a management system that has been stabll.
Having a deposit gives you the opportunity to earn a fixed income from the maturity date interest. So you will only get a report on the consequences without the hassle of managing existing assets. Of course, every investor aka owner of funds that invest their funds has a diverse view regarding the advantages and weaknesses of each of these investment instruments.
As a short carrier to get acquainted with financial investment instruments, here are the differences between stocks, deposits and bonds:
1. Capital Gain/Capital Loss
Capital gains are capital gains obtained by investors when selling their investment instruments at a higher price than their purchase price.
For example, an investor buys shares at a price of Rp2,000 and then sells them at a price of Rp2,500 a year later. The profit of Rp500 (Rp2,500 minus Rp2,000) is what is referred to as capital gain.
This profit potential is especially owned by stocks. However, other investment instruments such as bonds also have the potential to obtain capital gains.
Examples of bonds that have the potential to obtain capital gains are Retail State Bonds (ORI) <https://bigalpha.id/news/mengenal-investasi-ori-obligasi-negara-ritel>and Retail Sukuk (SR) <https://bigalpha.id/news/mau-diterbitkan-pemerintah-apa-itu-sukuk-ritel-sukri>. The profit can be obtained when the investor sells his bond at a higher price than the selling price in the secondary market.
The opposite of capital gain is capital loss that occurs when investors sell their investment instruments at a lower price compared to the purchase price.
Meanwhile, the potential for capital gains and capital loss is not owned by deposit instruments because deposits cannot be marketed by a customer to other customers.
2. Interest
Although it does not have the potential of capital gains, deposits introduce a potential profit called interest. Interest is a reward that must be given by the bank to customers as compensation for storing funds in the bank.
The profit potential of this interest is not owned by investment instruments such as stocks. Meanwhile, bonds have the potential to profit similar to interest with the same term that is coupons.
Coupon is a reward that must be given by the bond issuer (government / company) to the owner of the securities. In retail State Securities (SBN), coupons are usually paid monthly.
3. Guaranteed by the Government
Not all investment instruments are guaranteed by the government. Stocks, for example, are not guaranteed by the government when investors experience losses for several reasons.
Meanwhile, state bonds are investment instruments whose principal and interest payments are guaranteed by the government on the basis of a series of laws. The principal and interest payment funds are provided in the STATE BUDGET.
In addition, deposit deposits are guaranteed by government agencies, namely the Deposit Guarantee Agency (LPS). The maximum lps guaranteed deposit value of Rp2 billion with a certain guarantee interest rate.
4. Dividends
Dividends aka profits distributed by the company to shareholders can only be enjoyed in stock investments. Investment instruments such as bonds and deposits do not have the advantage of dividends.
5. Due
Bonds and deposits have a maturity date aka the time at which the investor's ownership period of the investment instrument expires. At maturity, funds held by investors in bonds will be returned to the investor by the initial capital (face value).
Almost the same as bonds, funds deposited by depositors in deposits can also be returned to customers. However, the customer is able to extend the deposit event with the terms and conditions that have been agreed with the bank.
Meanwhile, stock investments do not know the term maturity. As long as the shares remain traded on the Indonesia Stock Exchange, the shares do not have a maturity of ownership.
When seen at a glance both stocks, bonds and deposits are promising investment options. However, when viewed further there are a number of factors that make bond investment better than deposits.
Bond investments promise greater returns than deposits because of the lower tax breaks. In deposit investments, the amount of income tax imposed reaches 20%. While on bond investments, you will only be subject to income tax of 15% of total income.
The amount of deposit rates is usually lower than the interest on bonds. That way, the potential profit you will receive becomes lower.
The potential for capital gains on deposits becomes lower because it cannot be traded freely in the secondary market such as bonds.
In terms of term, deposits and bonds have different flexibility. Bonds have the advantage of being re-marketed throughout the working day but when certain bond selling prices can be below the principal if the economy is unstable. While the deposit has a tenor of course both principal and yield due to the agreement.
Investments in stocks, deposits and bonds proved to have positives and negatives. But when viewed more closely, bond investment is more extraordinary because it promises greater profits. In addition to capital returns so they are not at risk, bonds also allow you to earn capital gains and smaller tax deductions.