What are bonds? Why invest in bonds? How do we invest and earn money in bonds? What are the advantages and disadvantages of investing in bonds?

Should I Invest In Bonds? What Are Bonds?

1. What is a Bond?
a. Debt instrument
i. Pag-kakautang
ii. Ikaw ang nagpapautang
iii. Nagpapautang sa mga bangko, company, or gobyerno


2. Why invest bonds?
a. To diversify your portfolio
i. Do not put all your eggs in 1 basket.
ii. Good portfolio – mixture of stocks and bonds
b. Advantages of bonds:
a. Less volatile
b. Less risk than stocks
c. Steady income

3. Paano kikita sa Bonds?
Note: What we are discussing here are individual bonds. Bond fund is a completely different topic na paguusapan po natin sa ating susunod na videos.

a. Thru interest payment

Components of a Bond:
Principal (par value) = amount na iyong pinautang mo
Interest (coupon rate) = amount na iyong kikitain sa bond
Maturity Date (Term) = duration of the bond


For Example:

Treasury Bond

Issue date : 01 Jan 2022
Duration : 3 years (maturity 31 Dec 2024)
Par Value : P 100,000
Interest (coupon rate) : 5% pa
Interest payment : Semi-annual (June / Dec)

Year Date Interest Payment
1 Jun 2022 P 2,500.00
Dec 2022 P 2,500.00
2 June 2023 P 2,500.00
Dec 2023 P 2,500.00
3 June 2024 P 2,500.00
Dec 2024 P 2,500.00 + P100,000 = P 102,500.00

4. Paano makapag invest sa Bonds?
a. Individual bonds
i. Through your broker
ii. Through banks