Disclaimer: This article is for informational purposes only and does not constitute financial advice. BitPinas has no commercial relationship with any mentioned entity unless otherwise stated.
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When considering investment options, you might think of crypto trading, the stock market, gold, jewelry, real estate, or bonds. Each comes with its unique risks and rewards.
- Cryptocurrency investments are particularly high-risk due to their volatile nature.
- While it’s possible to see significant gains, such as a 40% increase, losses can be equally substantial.
Securing Crypto Earnings through diversification is key to managing these risks effectively.
- Converting crypto profits into other investment assets, such as bonds, can provide a stable interest rate.
The Importance of Bonds: This article explores why converting crypto earnings into bonds is a smart strategy and how to do so using the PDAX platform.
Note: This article is part of a series of beginner’s guides on investing with PDAX.
This article is in collaboration with PDAX. Make your next money move with PDAX by signing up here!
Understanding Bonds as a Secure Investment
What Are Bonds?
Bonds are financial securities where the investor lends money to a borrower, which can be a corporation or government, and in return, receives periodic interest payments until the bond matures. At maturity, the principal amount is repaid.
- Michael Lance, for example, might buy a bond for ₱10,000 with a 6% yield over three months, resulting in a return of ₱10,600 at maturity.
- Bonds function similarly to tokens; the borrower issues a token, and the lender purchases it through a financial institution, eliminating the need for direct communication or contracts between parties.
Government-Issued Bonds
In the Philippines, the Bureau of Treasury offers government bonds, known as Treasury Bonds (t-bonds). These bonds are an essential tool for funding government projects.
- T-bonds have shorter maturity periods, typically 91, 182, or 364 days.
- Retail Treasury Bonds (RTBs) are longer-term versions, often maturing over several years or decades.
Bonds on PDAX
PDAX facilitates the purchase of t-bonds and RTBs in a tokenized format, enhancing security and usability through blockchain technology.
- Tokenized bonds offer a minimum investment of ₱500 for T-bonds and ₱5,000 for RTBs on PDAX.
- PDAX received approval to offer these tokenized bonds at the close of 2023.
Why Bonds Are Considered Low-Risk
- Comparison with Crypto Trading: Bonds are stable compared to the volatile nature of crypto markets, providing a consistent interest rate.
- Security: Government-issued bonds offer a high level of security, with tokenization adding an additional layer through blockchain technology.
- Investor Suitability: Bonds are suitable for investors with low-risk tolerance or those needing a stable investment plan.
Why Crypto Earners Should Consider Bonds
Investing in stable assets like bonds can be a prudent decision for crypto investors who wish to secure their profits.
- For instance, withdrawing a profitable crypto position to invest in bonds can safeguard earnings against potential market downturns.
How to Purchase Bonds on PDAX
Follow these steps to invest in bonds through PDAX:
Create an Account
- Register and verify a PDAX account to at least level 2.
- Navigate to the Bonds section from the home page or portfolio page.
- Complete the additional KYC requirements, providing necessary identification numbers and contact information.
- Review the application, noting that submitted data is final.
Purchase Bonds
- Select the Bonds icon on the PDAX home page.
- Use the “Trade” feature within the Bonds section to choose and purchase the desired bonds.
Dates to Remember
- Offer Period: The timeframe during which bonds can be purchased on PDAX.
- Award Date: Investors receive confirmation of their investment status via email.
- Issue Date: Bonds are issued to investors two business days after the award date.
- Maturity Date: The date when bonds mature and investors receive their principal and interest.
Maximizing Returns and Security
Strategies for Crypto Investors
- Diversifying your investment portfolio can help ensure stability and potential returns even if the crypto market is underperforming.
- Consider reinvesting crypto gains into bonds if they are not needed immediately, as this provides a secure, interest-bearing option.
Taxation and Fees
- Bonds are subject to a 20% income tax, which should be considered when calculating potential returns.
Overall
Reinvesting crypto profits into bonds is a sound strategy for maintaining financial security.
- Bonds offer a fixed interest rate, government backing, and enhanced security through tokenization.
- PDAX provides an integrated platform for managing both crypto and bond investments.
Secure your crypto profits today through tokenized government-issued bonds on PDAX!
This article is published on BitPinas: How to Secure Crypto Earnings with Bonds: A Guide for Investors
Source: https://bitpinas.com/learn-how-to-guides/how-to-secure-crypto-earnings-with-bonds-pdax/
