Jakarta, CNBC Indonesia – Government Securities (SBN) are certainly the right choice for those looking for a fixed income investment instrument that is free from the risk of default. Since the tenors of SBN are quite varied, and many SBN are currently being discounted, how do we choose the right SBN for our financial goals?
As is known, in investing there are three main things that must be understood before starting. The first is the objective of the investment itself, next is the investment period, and the last is the risk profile.
Buying SBN for long-term investment is certainly very useful for investors who have a conservative risk profile or who prefer to avoid risk. The following is a list of 10 SBN and SBSN (State Sharia Securities) with the lowest average prices as of October 24, 2023.
In simple terms, when an SBN or SBSN is traded at a price of 100 (100%), then that price is the nominal price (par). However, if the price is below 100, then the price is a discount price.
But don’t buy without understanding the things below.
The maturity period certainly determines the term of your investment. When the SBN or SBSN you choose has a very long tenor, the average price fluctuations can be higher when the reference interest rate increases.
Before choosing an SBN, you should know the maturity date of the SBN or SBSN in question so that you can determine which SBN or SBSN suits your time period and investment goals.
Current yield & Yield to Maturity
Coupons may be an important thing to know when buying SBN or SBSN. However, when you buy it on the secondary market at a discount, the yield certainly shouldn’t escape your attention.
Yield in the table above is divided into two types, current yield and yield to maturity.
Current yield is the return received during a year on the stated bond price. Meanwhile, yield to maturity (YTM) is the yield obtained until the bond reaches maturity.
When prices decrease, yields will of course increase. Vice versa, the more expensive it is for us to buy SBN or SBSN, the smaller the yield from that SBN or SBSN will be.
Is it better to buy bonds directly or just mutual funds?