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Four ways to invest in bonds

POSTED ON AUGUST 20, 2021    

Investing in bonds is a way for you to earn by lending money. When you buy bonds, you get paid interest (in bond terms, this is called coupons) and you get the original amount you lent out at maturity, which is when the bond’s lifespan ends.


One way to classify bonds is according to who’s borrowing your money. Investing in Treasury bonds means that you’re lending to the government, while with corporate bonds you lend to a private company.


If you’re interested in investing in bonds, there are 4 easy ways to do it.


Directly through a bank

Banks are able to help you buy bonds for your portfolio with ease. You can do this at any of the bank’s branches, and you may be able to do this in the bank’s app if it has that feature.


Banks will offer both corporate and government bonds, although not all bonds in the market may be available. To see which ones suit you best, you’ll have to discuss your needs with a bank representative who can explain everything you need to know. If you're doing it through the bank's app, there will be a version of the explanations there too.


Directly through Bonds.PH app

Limited to government securities, this app allows you to directly purchase Philippine Retail Treasury Bonds from wherever you are.


Currently, app registrations are limited, and new slots are opened periodically. If you can’t make an account right now, keep checking back to see if it’s allowing signups again.


The Bonds.PH app allows you to both buy and sell your investment, and transfer your money through InstaPay, PESONet and electronic money wallets.


Indirectly through a pooled fund

If buying bonds directly doesn’t appeal to you, you can instead put your money in a pooled/managed fund that focuses on bonds. Examples of this are bond Unit Investment Trust Funds (UITFs), and bond mutual funds.


These funds are run similarly, with professional managers who handle the research and decisions for you. There are, however, some differences in terms of where you can get them.


In a nutshell, UITFs are offered by banks and are regulated by the Banko Sentral ng Pilipinas (BSP). Mutual funds, on the other hand, are typically available at insurance companies. Regulation is done by the Securities and Exchange Commission (SEC).


To invest in a bond UITF, you can visit a bank branch and ask about the available funds or check out the bank’s app. To do the same for a bond mutual fund, you can reach out to the company and ask to speak to an investment specialist.


Directly or indirectly through a licensed brokerage

Aside from banks, there are other licensed brokerages that allow you to invest directly in bonds or indirectly via pooled funds that have bonds.


Some of these companies, like First Metro Securities, also allow you to purchase stocks, and have apps that allow you to transact wherever and whenever you want. After putting money in your account, a few taps is all it takes to be a proud bond owner.

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