FAQ/Frequently Asked Questions
Here you will find basic answers to the most frequently asked questions related to investing in bonds
Why invest in timber company bonds?
1. Stable returns:
Timber company bonds offer stable and regular returns that are fixed at the time the bond is issued. This means that the investor knows how much money to expect and when.
2. Low correlation with stock markets:
Timber company bonds typically have a low correlation with stock markets, which means that if stock markets decline, they can provide some portfolio diversification and reduce overall risk.
3. Stability of the timber industry:
The timber industry is typically a stable industry with a steady demand for timber and timber products. This can help ensure stable and regular returns from timber company bonds.
4. Investment protection:
In some cases, timber company bonds can be secured by real estate, the company’s own assets, or commodities.
History of bonds
The first ever historically documented bond dates back to around 2400 BC in Mesopotamia. It was for payment of grain, which was a common medium of exchange at the time. In the time of ancient Alexandria, we can see the first promissory notes, with which the borrower confirmed his commitment to the banker. The banker, in turn, issued a confirmation of receipt of the deposit to the depositor.
What is a bond?
One of the most popular and reliable investment options for private investors is bonds. Corporate bonds are debt securities that companies issue to raise money to finance new projects, production lines, new products, and business expansion. When you buy corporate bonds, you lend money to the company, for which the company offers you an interest rate. They differ from other securities in that you can assess the benefits of bonds before investing. Bonds are repaid at a specified date, so the issuer pays bondholders the nominal value stated on the papers.
What is the highest investment you can make in bonds?
An investor can invest in bonds up to the value of the entire issue.
Can you invest in bonds gradually?
Yes, you can invest in bonds throughout the time they are offered.
Is it possible to invest smaller amounts?
It is possible to invest only in the amount of the nominal value of one bond. The nominal value of a bond is usually set in the range of 25-50 thousand CZK.
In the case of Wood Seeds, the nominal value of the bond is set at 50 thousand CZK.
Can I sell the bond?
The bond is freely tradable.
What does it mean that the project was approved by the CNB
The project is approved by the Czech National Bank, which guarantees the completeness, clarity and consistency of the information contained in the prospectus of the security, according to Act No. 190/2004 On Bonds: see. The Czech National Bank, as the financial market supervisory authority pursuant to Act No. 6/1993 Coll., on the Czech National Bank, as amended, the capital market supervisory authority pursuant to Act No. 15/1998 Coll., on supervision in the area of the capital market and on amendments and supplements to other acts, as amended, and Act No. 256/2004 Coll., on undertaking on the capital market, as amended, and as the competent authority pursuant to Regulation (EU) No. 2016/1111 of the European Parliament and of the Council of 11 December 2016 on the 2017/1129 of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market...
Is it possible to purchase a bond in installments?
Investing in installments is usually not possible.
If I buy as an entrepreneur, do I have to tax the income?
A business subscriber pays a withholding tax of 15%.
Are there any other fees charged when purchasing bonds?
In the case of our issue, there are no other fees when purchasing bonds.
When is interest paid?
Interest is paid monthly and is fixed for the entire term of the bond.
Who is the subscriber?
The subscriber can be a natural person without a business, a natural person with a business or a legal entity.
What does interest p.a. mean?
The value of interest p.a. represents an annual interest rate, but the investor receives only one twelfth of the annual interest income per month.
What is the nominal value?
The nominal value is the value stated on the bond and represents the nominal amount for which the bond was issued. It is the de facto price of the bond and is usually expressed in a currency, for example in crowns. The nominal value of the bond is always returned to the investor on the bond's maturity date.
Is there an obligation to file a tax return with the purchase of a bond?
If the subscriber does not carry out business activities and his income from the bonds is not part of his tax return, he is not obliged to file a tax return due to holding the bonds. However, if the subscriber does carry out business activities, he must pay a withholding tax of 15%.
Can I have the bond redeemed before the end of the issue/its maturity?
The possibility of returning the invested amount before the end of the issue is usually excluded, unless the terms of the issue provide otherwise, except in cases stipulated by the Bonds Act. The reason is to protect the financial budget of the project for which the funds obtained from the sale of bonds are intended.
Are there any fees associated with the purchase of a bond?
In the case of our issues, there are no fees associated with the purchase of a bond. After the issue is completed, the subscriber receives back the entire invested amount and receives the corresponding yield every month during the duration of the issue. See above.