Philippine bonds for beginners: Everything you need to know about this low-risk long-term investment
Investments are a great way to increase your sources of income. Investments like stocks and mutual funds are popular investment options that many finance-savvy Filipinos are adding to their portfolio. While there is always some amount of risk in investing, many find the chance of getting higher returns as worth the risk.
But it’s that same risk that makes many other Filipinos hesitant about investing. After all, when you have a family to look after, or a financial goal to aim for, you don’t want to put these on the line for income that isn’t a hundred percent guaranteed.
Many Filipinos may not know about Philippine Bonds, which are one of the safest investment instruments in the financial markets. If you’re interested in low-risk but high-return investments, here’s a guide to bond investments and why it may be the best investment option for the shrewd investor who wants to play it safe.
What are bonds?
Bonds are a passive investment asset. It serves as proof that its issuer (either the government or a private corporation) has borrowed money from you and they will pay you what you’re owed plus periodic interest payments over the period indicated on your bonds’ terms.
Let’s say that the government has an infrastructure project that will cost them 50 billion pesos. After the government exercises all their possible options for funding, they may find that they’re still short of 5 billion pesos. One solution is to issue multiple bonds totaling to that amount, but promising to pay it back after several years plus interest.
Individuals, organizations, and even foreign governments can buy these bonds in exchange for the money the government needs, and will be known as creditors or debt-holders. After the specified bond tenor has passed, the bond matures, and creditors can claim their debt plus the interest that they’re entitled to.
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Philippine bonds for beginners: Everything you need to know about this low-risk long-term investment
Investments are a great way to increase your sources of income. Investments like stocks and mutual funds are popular investment options that many finance-savvy Filipinos are adding to their portfolio. While there is always some amount of risk in investing, many find the chance of getting higher returns as worth the risk.
But it’s that same risk that makes many other Filipinos hesitant about investing. After all, when you have a family to look after, or a financial goal to aim for, you don’t want to put these on the line for income that isn’t a hundred percent guaranteed.
Many Filipinos may not know about Philippine Bonds, which are one of the safest investment instruments in the financial markets. If you’re interested in low-risk but high-return investments, here’s a guide to bond investments and why it may be the best investment option for the shrewd investor who wants to play it safe.
What are bonds?
Bonds are a passive investment asset. It serves as proof that its issuer (either the government or a private corporation) has borrowed money from you and they will pay you what you’re owed plus periodic interest payments over the period indicated on your bonds’ terms.
Let’s say that the government has an infrastructure project that will cost them 50 billion pesos. After the government exercises all their possible options for funding, they may find that they’re still short of 5 billion pesos. One solution is to issue multiple bonds totaling to that amount, but promising to pay it back after several years plus interest.
Individuals, organizations, and even foreign governments can buy these bonds in exchange for the money the government needs, and will be known as creditors or debt-holders. After the specified bond tenor has passed, the bond matures, and creditors can claim their debt plus the interest that they’re entitled to.
Hope it helps
-_SadBoy_-