November 29, 2021
How To Invest In Treasury Bills In Nigeria

How To Invest In Treasury Bills In Nigeria

Treasury bills in Nigeria are offered by the federal Government of Nigeria through the CBN (Central Bank of Nigeria). They are investments instruments that you as an individual or cooperation can invest in.

Additionally, treasury bills are a way to raise funds from individuals and organizations by the Federal Government (FG) to meet up with their short term financial needs. The Nigerian government makes use of funds from treasury bills to offset debts and pay salaries and other responsibilities such as paying military equipment’s.

Note: when an individual purchases treasury bills, they in order words lending the money to the government. Treasury bills are purchased using Naira and interests are paid in Naira also.

If you have phobia for doing investments or you may have actually lost funds in one investment or the other then you should give treasury bills a trail as they are safe and secured. Treasury bills are fully backed by the federal Government of Nigeria hence they are a safe investments to dabble into.

There are different treasury bills and different maturity dates and rates that you might find interesting to invest in. Treasury bills give you the opportunity to lend the federal government money for a period of time and then get paid back with interest. The time frame is usually 91, 182, or 364 days subject only to how long you would want the term to be.

The Treasury bill interest rate is determined by demand and supply in the market.
In the event that you may want liquidation of your assets before the set time, there will be a 30% penalty charge of all accrued interests and then again the minimum holding time before liquidation can be possible is a month that is total of 30 days.

Amount you can use to buy Treasury bill 

With as low as # 10,000 you can purchase Treasury bill but in multiples of #1000, but things changed. As at 2017, the central bank started selling Treasury bill for #50million. Now to make it easier co operations came up with a way to make things easier for those that want to purchase the bill. These cooperation purchases these bills from the central bank at that rate then start selling at a retail price. Their prices range from #50,000 to #100,000.

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Factors that may likely affect the prices of treasury bills

Listed below are some of the factors that affect the prices of treasury bills.

  • Investor’s risk tolerance
  • Specific supply and demand conditions for treasury bills
  • Monetary policy
  • Inflation
  • Macroeconomic conditions

The process to get started with treasury Bills

To get started with treasury bills you will have to:

  1. Visit any financial institutions( stockbrokers and banks)
  2. Fill up a form and input your details and also the amount you are willing to invest coupled with the bid rate.
  3. You can purchase Treasury bill from mobile applications like i-invest or any dealer that is official.

When do they start selling Treasury bill

Treasury bills are sold on bi-weekly basis and it is always announced by the central bank through their social media handles or websites, also through the pages of newspaper. You can also get the information from your bank officer.

Some benefits of investing in the Nigerian Treasury bill.

Some of the benefits you get by investing in the Nigerian treasury bills include:

  • They can easily be converted to cash without wasting time since they are in liquid form.
  • Treasury bills can be used as collateral when applying for a loan
  • For disposable income, it provides an excellent opportunity for investments.
  • It is an investment that is risk free since you are lending to the government.
  • You don’t need to pay tax from the interest accrued.

 

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Some terms you should be familiar with as an investor in Treasury bill.

  • Bid rates: Bid rate is the discount rate an investor is willing to take on investing in treasury bills.
  • Bill auction: Just like the name bill auction is held bi-weekly by the central bank to sell off bills.
  • Treasury yields: A treasury yield is the return gotten from your investment in treasury bills and it is given in percentage.

Conclusion

Investing in Treasury bill is a sure way to make money as there are no risks involved. It is one of the safest forms of investments as it is backed by the Federal Government and the Central Bank.

If you have the funds just go ahead, but if you do not you can as well use the option of money pooling provided by your bank.

If you find this article about Treasury Bills in Nigeria useful please do not hesitate to share and comment below. Thank you!