[Heart] I. What is a Treasury Bond

As the name suggests, it is a debt issued by the state. There are currently mainly three types: certificate bonds, electronic bonds, and book-entry bonds, with terms of 3 years and 5 years.

Certificate Bonds - Also known as savings bonds (certificate type), it refers to the state not printing physical coupons, but using the method of filling in the "People's Republic of China Certificate Bond Receipt" to issue savings bonds to urban and rural residents and various investors through commercial bank counters. Certificate bonds are issued to the public, can be reported lost, cashed in advance, apply for pledge loans, issue deposit certificates, etc., but cannot be renamed or transferred on the market. The interest on the bonds purchased by investors starts from the date of purchase, and the principal and interest are repaid at maturity at one time, without compound interest, and no interest is added for overdue. When investors need to cash in advance, they can go to the original outlet or a branch under the jurisdiction of the first-level branch to handle the advance cash payment.

Electronic Bonds - In essence, it is the digitalization of certificate bonds, which is more convenient to purchase than certificate bonds and has no risk of loss.

Book-entry Bonds - Similar to electronic bonds, they are issued by the Ministry of Finance in a paperless manner, and the creditor's rights are recorded by computer accounting, which can be named and reported lost. Book-entry bonds are the largest category of bonds issued in our country, with multiple batches of book-entry bonds to be issued every month. The interest rate of book-entry bonds is not fixed, it will change with the rise and fall of the bond price. Compared with savings bonds, the interest rate of book-entry bonds is about 1% lower, but there are more options for the term of book-entry bonds, ranging from 3 months to 50 years, and because of the large issuance volume, they are also easier to buy.

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[Heart] II. Why buy Treasury Bonds

Safety: Since treasury bonds are issued by the state and have the guarantee of national credit, they are also known as "gilt-edged bonds". Among all investment and financial management tools, they have the smallest risk and are the safest.

Return rate: Its interest rate is higher than bank deposits and is popular with investment institutions and the general public.[Heart] III. How to Purchase Government Bonds

(1) Purchase Time

The Ministry of Finance of the country will release the government bond issuance plan for the year at the beginning of each year, and commercial banks will also publish relevant information. Generally, from March to November each year, certificate-based government bonds are issued on the 10th of odd-numbered months, and electronic government bonds are issued on the 10th of even-numbered months.

(2) Where to Purchase

Certificate-based and electronic government bonds are purchased through banks, but not all banks can purchase them. According to the information released by the Ministry of Finance, there are a total of 40 underwriting banks for savings government bonds in 2021.

Book-entry government bonds can be purchased through banks or securities trading platforms.(III) How to Purchase

1. Certificate Treasury Bonds

Purchase Channels: Can only be purchased through bank channels. If you pay attention, you will find that there are many aunts in line in front of some banks early in the morning, and the line is very long. In fact, these aunts are waiting to buy certificate treasury bonds. Generally, state-owned banks and joint-stock commercial banks sell savings treasury bonds, which are usually around the 10th of odd-numbered months of the year.

2. Electronic Treasury Bonds

Purchase Channels: Can be purchased through bank counters, mobile banking, and online banking. Generally, state-owned banks and joint-stock commercial banks sell savings treasury bonds, which are usually around the 10th of even-numbered months of the year. The prerequisite is to handle a commercial bank debit card for underwriting treasury bonds and open online banking and mobile banking. The purchase of electronic treasury bonds is usually sold out as soon as it is launched, so you need to ensure the network and be quick and sharp. The way to purchase at the bank counter is the same as purchasing certificate treasury bonds, which is not repeated here.

Mobile Banking Method - Take out your mobile phone, download the ICBC Mobile Banking APP, click to open it, enter the username and password to log in to the mobile banking, find "Savings Treasury Bonds", and click in to purchase the current or past electronic treasury bonds. Here, ICBC is taken as an example, and other banks are similar.Online Banking Method - Turn on your computer, go to the official website of the Industrial and Commercial Bank of China, enter your username and password to log in to the online banking, and click on "Online Treasury Bonds". After entering, you can purchase current or past electronic treasury bonds. Here, the Industrial and Commercial Bank of China is used as an example, and other banks are similar.

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Select the Treasury Bond to Purchase3. Book-entry Treasury Bonds

Book-entry Treasury bonds are generally divided into three major scenarios: exchange market issuance, interbank bond market issuance, and simultaneous issuance in both the interbank bond market and the exchange market (also known as cross-market issuance). Generally speaking, retail investors can purchase book-entry Treasury bonds issued in the exchange market and cross-market, while those issued in the interbank bond market are mostly targeted at institutional investors, and individual investors cannot purchase all types of bonds.

Purchase through banks - Open a Treasury bond custody account at the commercial bank's counter to buy and sell book-entry Treasury bonds. The account opening fee is 10 yuan per account, and then purchase through mobile banking, online banking, or at the bank counter without any handling fee.

Purchase through exchanges - Open a trading account through a securities trading company, log in to the trading account, and choose the appropriate bond type for buying and selling, similar to stocks, and pay a trading service fee.

Bond prices are inversely proportional to market interest rates. When interest rates fall, bond prices rise, and when interest rates rise, bond prices fall. If the lender expects interest rates to fall, they can buy a large amount of bonds. When the interest rates really fall and bond prices rise, they can sell the bonds to obtain a considerable profit higher than the interest. If the lender expects interest rates to rise, they can sell the bonds in hand first to make a profit, and then buy the bonds back when the interest rates really rise and bond prices fall. At this time, the actual yield of the bonds is higher than the face interest rate.

Compared with the other two types of Treasury bonds, book-entry Treasury bonds have the following advantages:

(1) Variety is abundant. There are currently 29 book-entry Treasury bonds listed for trading, with terms ranging from 1 year to 20 years.

(2) High returns. The yield of exchange-traded Treasury bonds is generally higher than the interest rate of savings deposits of the same period, as well as the interest-bearing Treasury bonds issued at the same time, and the interest is tax-free.

(3) High security. Guaranteed by the state, the principal is paid by the Ministry of Finance upon maturity.

(4) Good liquidity. After listing, book-entry Treasury bonds can be bought and sold at any time through the securities market.Translation of the provided text into English:

(5) Convenient purchase. Subscription to government bonds can be processed at any time during trading days.

Precautions to note:

(1) For the advance withdrawal of certificate-based government bonds, if the holding period is less than 6 months, no interest is calculated for the advance withdrawal; if the holding period is 6 months but less than 1 year, interest is calculated at an annual rate of 0.74%; if the holding period is 1 year but less than 2 years, interest is calculated at an annual rate of 2.74%; if the holding period is 2 years but less than 3 years, interest is calculated at an annual rate of 3.49%; if the holding period is 3 years but less than 4 years (for 5-year certificate-based government bonds), interest is calculated at an annual rate of 4.01%; if the holding period is 4 years but less than 5 years (for 5-year certificate-based government bonds), interest is calculated at an annual rate of 4.15%. In addition, a 0.1% handling fee must be paid for early redemption.

(2) For the advance withdrawal of electronic government bonds, if the holding period is less than 6 months, no interest is calculated for the advance withdrawal; if the holding period is 6 months but less than 2 years, interest is calculated at the issuance rate, with a deduction of 180 days of interest; if the holding period is 2 years but less than 3 years, interest is calculated at the issuance rate, with a deduction of 90 days of interest; if the holding period is more than 3 years (for 5-year electronic government bonds), interest is calculated at the issuance rate, with a deduction of 60 days of interest. In addition, a 0.1% handling fee must be paid for early redemption.

Therefore, investors must make a long-term financial plan before purchasing certificate-based or electronic government bonds, reasonably reserve funds for emergency use, and avoid "loss-making transactions".

(3) Investing in book-entry government bonds requires avoiding the misconception that it is most cost-effective to hold them until maturity. For book-entry government bonds circulating in the secondary market, prices fluctuate, affected by interest rate changes, capital speculation, and other factors, which makes the earnings of the subsequent years "overdrawn" in advance, making it quite difficult to operate and also carries greater risk. It is recommended to choose to purchase book-entry government bonds with higher face interest rates.

4. An alternative presence of government bonds - Reverse Repo of Government Bonds

Everyone knows that government bonds are bonds issued by the state, which is equivalent to the state borrowing money from you and repaying the principal and interest on time. Reverse repo of government bonds is when a company uses the government bonds in its possession as collateral to borrow money from you, with an agreed interest rate to repay the principal and interest upon maturity. If he cannot repay it, the mortgaged government bonds will belong to you, which is extremely safe.

Purchase method: Open a trading account through a securities trading company, log in to the trading account, and choose the appropriate type for buying and selling, similar to stocks, and a transaction service fee is required, such as GC001, GC007, R-001, R-007, etc.Generally speaking, the returns from reverse repurchase of government bonds are not high under normal circumstances. However, as holidays approach, especially at the end of the month, quarter, or year, the returns can be particularly high, making it a good opportunity to earn extra money or "clip coupons" for bonuses.