Bond type investment is a fairly profitable asset allocation strategy with a stable value so that the risk is minimal compared to stocks. In the financial world, did you know that Bonds are long, medium or short term investments?
Actually, Bond investing can be classified into all three. However, this depends on how you set your investment strategy with long, medium or short term goals.
Differences in Long, Medium and Short Term Investments
For an investor, it is very important to bogorupdate.id understand the difference between long, medium, and short term investments. The goal is that the investments are made according to the target and the instruments purchased are also suitable. The following are a number of differences from the three types of investment which are distinguished based on time, profit, and goal.
- Time
As the term implies, long-term investment requires the longest time to invest, which is around more than five years. Whereas for medium-term investments it takes about 1-5 years and short-term only less than 1 year.
You can determine the type of investment in the long, medium or short term based on that time. Usually, long-term investments are chosen to prepare for retirement funds and Bond type investments are highly recommended.
There are two types of Bond investments that are commonly known, namely Government Bonds and private Bonds. Many people recommend Government Bonds over private companies because assets issued by the government are more secure, while companies have the risk of default.
- Profits
Based on the different investment times, of course, the profit levels are also different. Short term investment takes a short time so the expected profit is more than long term investment. However, this depends on the investment instrument chosen.
For example, only investing in Mutual Funds, of course the profit is smaller than stocks that have high returns but the risks are big. Therefore, long-term investment can be a mainstay for those of you who want to get high profits in a long period or dozens of years.
Meanwhile, medium-term investments allow you to earn passive income safely in about 1-5 years. The value of this profit can be a consideration for you to choose the right investment instrument.
- Goal
With regard to goals, long, medium and short term investments also depend on the estimated time you need to obtain the targets you want to achieve. If you need capital quickly, then short-term investment is the recommendation. For example, funds for home renovation or buying furniture.
Meanwhile, medium-term investments are usually more focused on slightly longer needs. For example, investing in children’s education, buying a vehicle, or building a dream house. Especially for long-term investments, it is most suitable for preparing retirement funds.
For investors, setting goals is very important before deciding to buy an asset. The goal of investing helps investors to be more focused on achieving their targets so that financial management becomes wiser.
Short, Long and Medium Term Investment Instruments
There are many types of short, long and medium term investments that you can choose from. Here are a number of these types of investments that you can make reference to.
- Types of Short Term Investment
If your target is to raise profits for less than one year, then consider choosing investments in the types of Fixed Deposits, Money Market Mutual Funds, Fixed Income Mutual Funds and Bonds.
These types of instruments are considered capable of offering higher profits in a relatively short time, especially when asset values increase.
On Fixed Deposits, you can withdraw the funds within a span of three months. Whereas in some Mutual Funds and Bonds, a high return will speed up the collection of capital provided you understand the movement of assets and the risks.
Usually, someone chooses this short-term investment usually to meet needs in the near future or who need small capital. For example, to build a swimming pool, renovate a room, buy electronic equipment, and more.
- Types of Medium Term Investment
If you want to invest with a high profit potential but lower risk than stocks, choose a Bond type investment such as the Obligasi Ritel Indonesia (ORI). This instrument is one of the safest in investing because its management is guaranteed by the state.
You can benefit from regular interest payments and opportunities for capital gains. The potential for capital gains will be even higher if the difference between sales and purchase value is also high.
- Types of Long Term Investment
For those of you who want to plan finances in the long term, especially for preparing retirement funds, investing in gold, Equity Mutual Funds and stocks is the right option. This type of long-term investment is chosen by many investors in diversifying.
Gold is an instrument which value tends to rise steadily and Mutual Funds are also more stable and have lower risk. In terms of profit potential, it is not as high as stock returns, but in the long run it can be very profitable.
Therefore, many recommend these two types of investment as future savings.
Enjoy the Benefits of Bond Investment with DBS Treasures
Bonds can be your reliable investment instrument because they offer a sizeable return potential, a more stable value, and there is a guarantee of payments on government-issued assets. If interested, priority banking DBS Treasures is the right choice in investing in Bonds because there are many advantages of investing as follows:
- Gain Regular Coupons
You will gain coupons (interest) periodically until the end of the Bond term.
- Capital Gain Potential
There are various types of Bonds that can be sold at any time and gain potential profits from rising Bond prices.
- Competitive Coupons
Competitive profit value above the average interest given by Fixed Deposits.
- No Additional Fees
You are not charged anything because there is only the spread, which is the difference between the selling price and the buying price (bid and offer).
- 24/7 Transaction
You can trade Bonds easily 24 hours a day on the digibank by DBS Application.
Another advantage that you need to know is the opportunity to be supported by curated market analysis from a team of financial experts who will communicate it. Gain the latest opportunities that have been adjusted to your risk profile and portfolio needs, driven by Artificial Intelligence/Machine Learning (AI-ML). This insight is equipped with curated solutions related to investment (Grow) and insurance (Protect), so you can quickly and confidently invest through your preferred media.