Bonds and state notes
- Safer than investing in shares
- Periodic coupon interest
- Typically higher returns than savings accounts
What is a bond? And what is a state note?
When you buy a bond, you are actually lending money to a company or a country. In return, you will receive annual interest. After a certain period, the bond expires and you will normally get your lent money back.
If the bond is issued by a company, it is called a corporate bond. If it is issued by a country, it is called a government bond, also known in Belgium as ‘state notes’. There are also savings certificates, in Belgium, where you effectively lend money to a bank.
Please note: a bond is still an investment and is therefore not entirely without risk. Companies and countries could go bankrupt or lack sufficient capital to pay the coupon interest or to repay the bond at maturity.
What returns do bonds offer?
Bonds are an interesting investment if you are looking for a higher return without taking a lot of risk. They typically offer a better return than a traditional savings account, whilst offering greater security than shares.
For instance, most bonds offer a fixed interest rate in the form of periodic coupon interest. So you know from the start precisely what income you can expect to receive each quarter or each year. Though there are also some bonds which have variable interest rates.
Read more about the pros and cons of investing in bonds.
How much does investing in bonds cost?
The issue price of a bond varies from bond to bond, as it is determined by the company or country that issues the bond. When a bond is resold at a later date, the selling price is referred to as the secondary price. The secondary price depends in part on the what is happening to market interest rates.
As well the issue price, you pay commission, and you will also pay withholding tax on the interest you receive.
A final point worth bearing in mind is that you will need a custody account in order to invest in bonds. KBC can provide a custody account for free.
How to invest in bonds
You can invest in a range of different bonds through KBC. The first thing to do is to make an appointment at your nearest branch or take a look at the current available bond issues.
Legal information about the KBC Time Deposit Account
- This is a temporary offer for investing new money, i.e. the increase in the balance of your personal KBC accounts between 5pm on 30 August 2024 and the time of subscription. The subscription period is open from 4 September to 15 September 2024. The amount you wish to invest will only be transferred to your KBC Time Deposit Account on 16 September 2024.
- The minimum subscription amount for theKBC Time Deposit Account in euros with a term of 6 and 13 months is 500 euros. For a term of 6 months, the interest is paid at maturity. For a term of 13 months, interest is paid after 1 year and at maturity. The KBC Time Deposit Account is a product of KBC Bank NV and is governed by the laws of Belgium.
- There is no key saver information document. Read the terms and conditions beforehand as a time deposit account also entails certain risks and charges.
- Costs and charges: There are no entry or exit charges if you keep the term investment until maturity. Customers are not entitled to full or partial early redemption. More information on redeeming the investment can be found in the product fact sheet at kbc.be/time-deposit-account.
- Risks: This product is covered by the deposit guarantee scheme for an amount up to 100 000 euros per person and per bank. This time deposit account also has an inflation risk, as sustained price increases can result in the amount deposited losing value.
- Tax treatment: For individual investors who are subject to Belgian personal income tax, the income is subject to Belgian withholding tax of (currently) 30% on the gross amount of interest. The tax treatment will depend on individual circumstances.
- Your branch is your first point of contact for any complaints you may have. If no agreement can be reached, please contact KBC Complaints Management, complaints@kbc.be, tel. 016 43 25 94 and, if necessary, the Belgian ombudsman service in financial conflicts: Ombudsfin VZW, ombudsman@ombudsfin.be, www.ombfin.be/en.
- Note: KBC may end this offer early.
