Of the many investment instruments currently available, bonds have been a type of investment that is quite old and popular among investors, both beginners and experienced investors. Bonds are considered as one of the most stable investments and provide a fairly high return.
For those who don’t know what bonds are, bonds are a term in the capital market to refer to a statement of debt issued by the bond issuer to bondholders. In short, the issuer of the bond is the debtor and the bondholder is the debtor.
In bonds, the maturity of debt payments and the interest (coupon) is written which is the obligation of the bond issuer to the bond holder. The term of the bonds valid in Indonesia is generally 1 to 10 years.
Of the various types of bonds currently available, Indonesian retail bonds or what are often also called retail state bonds are one of the types of bonds that are widely purchased today, so what are Indonesian retail bonds?
Definition of Indonesian Retail Bonds (ORI)
Indonesian Retail Bonds were first offered to the public in 2006. In 2021, Indonesia has issued ORI up to the 20th series. So far, orders have always been full bookings, meaning there has never been a shortage of enthusiasts.
Retail government bonds (ORI) or also known as retail government bonds are one of the Government Securities (SBN) instruments that are offered to individuals or Indonesian citizens through Distribution Partners in the Primary Market and are a safe, easy, affordable, and affordable investment alternative. profitable, with the characteristics of being tradable in the Secondary Market.
ORI has a maximum term of 3 years. Bonds issued by the government are also attractive because you can potentially earn capital gains if bond prices increase in the future. That is, bond prices can rise in certain circumstances.
The way Indonesian retail bonds work is that the government will pay bond debts to investors, namely the public, until maturity, accompanied by yields or called coupons. Investors who buy ORI or other SBN from the government will certainly benefit from the coupons provided.
The government will pay the coupon every month to investors. The amount of the ORI coupon remains the same every month, so even if there are fluctuations in the securities market, it will not affect it. In addition, another advantage that ORI investors will get is being able to resell on the secondary market to other investors.
Here are some characteristics of ORI:
- In the form of scripless and can be traded between Domestic Investors
- Coupons (fixed rate)
- There is potential for capital gain/loss
- Minimum purchase IDR 1 million, maximum IDR 2 billion
Benefits and Functions of Indonesian Retail Bonds
As one of the most suitable, safe and easy investment instruments in the capital market for novice investors, Indonesian retail bonds also have benefits and functions that can be obtained when investing in retail bonds, namely:
- Investors will receive periodic interest coupons whose amount is relatively fixed so that each month the yield can be estimated.
- Investment products whose security is guaranteed by the government and between investors can trade them on the secondary market.
- The government provides opportunities for the public to invest safely and affordably with low risk.
- ORI is a form of community assistance for the government in implementing various programs related to community welfare, such as infrastructure, health, education and others.
- Investment products that have interest exceeding deposits and inflation with a low level of risk.
- The more investors who invest in ORI, it will help strengthen the rupiah currency.
- ORI can help the government to cover the budget shortfall by obtaining other sources of income.
How to Buy Retail Government Bonds (ORI)
Every individual or Indonesian citizen who already has an Identity Card (KTP) can buy ORI at the Primary Market. Meanwhile, domestic investors, both individuals and institutions, can buy ORI in the Secondary Market. Here’s how to buy Indonesian retail bonds, quoted from www.kemenkeu.go.id :
Registration can be done at any time even before the retail SBN offering period opens. Prospective Investors can register in the electronic system provided by the Distribution Partner (Midis), by inputting data including personal data, SID (Single Investor Identification) number, Fund Account number and Securities Account number. For Prospective Investors who do not yet have an SID number, Fund Account, and/or Securities Account, they can contact Midis.
Single Investor Identification (SID) is a single and special code issued by the Indonesian Central Securities Depository (KSEI) as the depository and settlement institution.
After successful registration, Prospective Investors place an order for ORI021 by previously reading the provisions in the Information Memorandum. Orders can only be made during the ORI020 offer period.
After the order is verified (verified order), Potential Investors will receive a payment code (billing code) via email/sms according to the policies of each Distribution Partner. The payment code is used for depositing investment funds through the Perception Bank (teller, ATM, internet banking, mobile banking)/Post/Other Perception Institutions within the specified time limit.
After payment, Prospective Investors will receive an NTPN (State Revenue Transaction Number) and completed order notification and will receive an ORI021 allocation on the settlement/issuance date. After settlement, investors can ask Distribution Partners for Proof of Ownership Confirmation of ORI021.
How to Calculate Interest on Indonesian Retail Bonds
For novice investors, you must be curious about how much profit you can get from ORI investments? The following is an example of how to calculate ORI profits with manual calculations:
You are a novice investor who places an ORI order with a minimum order of IDR 1 million (1 unit), here’s how to calculate it with an interest rate of 4.95%:
- IDR 1 million x 4.95% = IDR 49,500 thousand per year
- 500 thousand : 12 months = IDR 4,125 per month
- 125 x 15% (PPh) = IDR 618.75 per month, net coupon IDR 3,506.25
- 506.25 x 36 months (3 years due) = Rp126,225
Then, what about beginner ORI investors who want to buy ORI as much as IDR 5 million? Here’s the calculation:
- IDR 5 million x 4.95% = IDR 247,500 per year
- IDR 247,500 : 12 months = IDR 20,625
- 625 x 15% (PPh) = 3,093.75, the net coupon is IDR 17,531.25
- 531,25 x 36 = Rp631.125
In addition to interest or yields that are quite large, here are some other benefits that can be obtained from investing in Indonesian retail bonds:
- Coupons and trees are guaranteed by law
- Coupon with fixed interest rate until maturity
- Can be traded on the secondary market (between domestic investors)
- Potential to get capital gain
- Can be traded on organized OTC via Electronic Trading Platform (ETP)
- The coupons offered are higher than the average state-owned bank deposit interest rate
- Coupons are paid monthly every 15
- Availability of purchase price quotations (bid prices) from Distribution Partners or other parties working with distribution partners
- Can be loaned or pledged to other parties (according to the policies of each distribution partner
- The risk of loss is relatively low
- The community participates in supporting the financing of national development as it is now after the Covid-19 pandemic
Tips for investing in Indonesian retail bonds in the secondary market for maximum profit:
- Sell at the right time, after the minimum holding period specified in each series ends
- Sell at the same place when you buy ORI. For example, you buy at BCA, then you resell at BCA
- Monitor the selling price first
- Sell when many people are interested in ORI in the primary market
- Avoid selling near maturity
- Don’t sell when you have an urgent condition
Adjust to Financial Goals
ORI is an investment instrument that is quite feasible to be considered as an option. Given the risk contained in it is quite small, while the benefits are quite promising.
Nevertheless, it is important for you to adjust your financial goals with this type of investment. Because ORI has a fairly long maturity period, which is at least 5 years. Consider the risks, benefits, and financial goals from the start so that your investment is maximally successful.