Now in our application, you can buy corporate bonds. These are debt securities issued by companies or corporations (issuers). Corporate bonds are traded on the stock market, just like other securities.

Corporate bonds are very similar to government bonds – they have a maturity date and coupon payments. But there are significant differences:

• The company (or corporation) itself guarantees payments on corporate bonds, not the government as is the case with OVGZ.
• The income earned from investments is subject to taxes:
  • Personal income tax – 18%
  • Military tax – 1.5%
• The issuer has the right to revise the interest rate (either annually or semi-annually).

Typically, corporate bonds offer a higher yield than government bonds, even after accounting for taxes. Therefore, you can achieve a higher return by taking on more risk.

Taxes are calculated when coupon payments are made. The company (or corporation) issuing the bonds acts as the tax agent. Tax rates can change at any time, so this risk should be considered for long-term investments.

Once a year (or every six months), the issuing company has the right to review the yield rate. If the rate changes, investors can demand the bonds to be redeemed, and the issuer is obliged to carry out this redemption. This does not increase the risk, but it's important not to miss this opportunity and make the appropriate decision.

Let's consider an example of calculating the yield of corporate bonds. In the issuance prospectus, the issuing company specifies the yield without taking taxation into account.

For example, the prospectus sets the yield rate at 28% per annum, with quarterly payments, and a 3-year investment term.

If we subtract taxes, the yield will be 22.54% per annum (28 - 28*19.5%). In this calculation, we do not consider the possibility of reinvesting coupon payments.

In our application, the yield is calculated taking into account the reinvestment of coupon payments, and for this example, it will be 24.35%.

Before investing in corporate bonds, it is advisable for the investor to familiarize themselves with the company's activities to better understand what the company does and how risky its activities are. It is important to note that, unlike government bonds, in the event of the company's bankruptcy, the government will not compensate the investor for their losses – corporate bonds are solely secured by the assets of the issuing company and its own capital.

We wish everyone wise investments!