For all of you who dream to have a comfortable life and a bright future, investing is absolutely essential for making your dream come true. As the economic fallout from the COVID – 19 pandemic has demonstrated, a seemingly stable economy might be rapidly turned into something unexpected. That’s why we are here to introduce you, a safe way of Investing to keep your path on track to make the dream come true faster than you think. With investing in Bond, you can spend and invest at a lowest risk the provide you with another source of income, fund your retirement or even get you out of a financial jam especially for all who planned to have a wealthy life after the retirement.
With our article, you will know how to buy Bonds, where to buy bonds that can help you meet your financial goals and increasing your income in the second half of 2022. Let take a look.
Who take charge of bond market?
In the year of pandemic, 2019 – 2022, investing in bond is now one of the best investing that can help you grow your income with the lowest risk. Buying bonds isn’t as complex as it might seem but you do have to learn the different types and figure out what to look for in a bond before you buy it.
In Thailand, the Thai Bond Market Association (ThaiBMA) is a securities business related association under the Securities and Exchange Commission who operate the bond market and to be an information center for the Thai bond market. It also plays functional roles on market development, market convention and standards and being Bond Pricing agency for the industry.
How to Buy Bonds
Bonds or government bonds (almost 90% of bonds in Thailand) is a type of debt issued by a government agency (ThaiBMA). Or state enterprises. The investor will have a creditor status who will get repayment and other benefits such as interest from the debtor. Investing in bonds is not as complicated as the other investments. Investors can buy bonds to keep until the redemption time, approximately 3/ 5/ 7 years, the principal will be returned with an average interest of 3% per year.
The bond market is divided into 2 markets, just like other type of investment. It’s traded in the primary market (Primary Market) and in the secondary market (Secondary Market) which are different as follows.
The first market (Primary Market)
This market is the first bond trading. It is a trade between bond issuers and investors. The selling price will be the ticket price. or lower price It is sold to two types of investors with different pricing methods. Retail investors are sales to the general public. The selling price starts at 1,000 baht (THB). Some bonds limit the amount of investment. But some types are not limited. depending on the conditions of the institution that issued the bond can be purchased through commercial banks.
Institutional investors are sales to investment institutions such as mutual funds that have a policy to invest in government bonds. The selling price is set by auction which is divided into competitive auctions. lowest bid get the right to buy first with non-competitive auctions will be sold at the average price in the same auction.
It is the trading of bonds between investors themselves that are not bought through the first market or investors who buy through the first market but wants to sell the bond before the contract expires. Investors must sell through the secondary market. Trading is both a mutually agreed-upon trade. and trading in the bond market (Bond Electronic Exchange, BEX), which is traded through a broker.
Should I invest in Bond 2022?
If you are interested in bond investing, you have to take a clear view of this topic. We will help you with a guide to make your own checklist to make sure that investing in bond is suitable for you. Let take a look.
- If you are looking for an investment with a very low risk, Bond is suitable for you. Those who want certainty in terms of returns risk-averse. Not much to accept damage from investment and need a lump sum for investment Including the investment amount, the investment period must be consistent with the bond period.
- If you are a person who want to use debt instruments for investment management (Portfolio Management) to be more secure. Investing on bond is suitable for you.
In addition to investing in risky assets such as common stocks with high returns, you should also invest a portion of your money in debt instruments. In order for debt instruments to generate a steady stream of income for use as regular expenses. In addition, you will receive a refund of the principal at the end of the redemption period. Investing in debt securities therefore creates a balance in the investment portfolio.
“How much should investors allocate their investments to invest in debt instruments?” the answer is here, It depends on many factors such as the age of the investor. Size of recurring income compared to recurring expenses and most importantly, the acceptable level of risk. If you are not old only worked for a few years have enough fixed income to cover regular expenses and likes to take risks may share investments in debt securities in a not very high proportion.
There’re a list of government bonds that you can take a look and learn some details for investing in he future. Click here
#bond market predictions 2021