Last Updated on July 28, 2020 by Henry Ibeleme
I started hearing about treasury bills in Nigeria seven years ago, and it sounded like mumbo-jumbo to me.
I mean, it sounded technical and boring. If you’re not careful, you might think this investment requires specialized knowledge or education.
Due to ignorance of how this investment works, I overlooked this opportunity. If you don’t have the mental strength to invest in real estate or start a business, investing in T-bills will sound appealing.
Many consider treasury bills is one of the most popular and virtual risk-free investment. My mentor prefers to call it the lazy-man investment.
But before you start thinking of investing in treasury bills in Nigeria, there is a need to know what it is.
Well, let’s start with a standard and straightforward definition of what a treasury bill is.
Table of Contents
- What Is A Treasury Bills?
- Treasury Bills In Nigeria Processes
- Minimum Purchase Amount Of T-Bills And Tenures
- Frequently Asked Questions On Treasury Bills In Nigeria
- Why You Should Invest In Treasury Bills In Nigeria
- Over To You
What Is A Treasury Bills?
Treasury bills are merely security issued by the CBN. When you invest, you’re merely lending money to the government. It can also be a tool used to control money supply in the economy.
To engage in this kind of investment, you will need to buy treasury bills through an official dealer. If you want this process to be fast, going through banks will be ideal.
This article will equip you with all the information you need concerning treasury bills in Nigeria, and how you can invest.
Virtually everyone can invest, including individuals, corporate bodies, institutions, banks, discounted houses, and brokers.
If you have the money to invest, it means you’re eligible. In that case, here are the investment processes you will undergo.
Treasury Bills In Nigeria Processes
When it comes to T-bills, investment is through auction and ranges from 91 to 730 days. Before that, there is often an advertisement, showing that it is time to bid.
To invest in the treasury bills, you will need to obtain and fill out an application form through any of the dealers or the bank.
When submitting the form, you will be required to state your discounted rate. It is merely the discounted rate value. You can request a rate of 12% – 14% or leave this aspect to the bank.
The minimum amount to invest is #10,000. However, this figure was increased to #50 million in March 2017.
You do not need to panic, as investors with low capital can still invest in Treasury bills in Nigeria without hurdles.
Banks designed a system where they pull everyone’s investment together to meet the #50 million investment threshold.
By the end of the day, every investor receives their share based on personal input.
Minimum Purchase Amount Of T-Bills And Tenures
The minimum purchase depends solely on your bank. Some banks offer a minimum of #50,000, while some offer as high as #500,000.
When it comes to Treasury bills, there are three main tenures: 91 days, 182 days, or even 364 days.
To ensure you get the best rate, I would advise conducting intensive research. Find out the bank that is offering a more attractive discounted rate.
There have been reports of banks offering as low as 2.4%, which is pretty small.
Frequently Asked Questions On Treasury Bills In Nigeria
Is Treasury Bill In Nigeria Safe?
Treasury bill is entirely dependent on the Federal Government of Nigeria. Many investors consider this investment as the safest and risk-free investment.
All you need to do is invest and wait for your investment to mature depending on your tenure.
When Do I Get Paid?
The interest accumulated is paid directly to your bank account. For instance, when you purchase a #200,000 T-bill with an interest rate of 10%, you will get #180, deposited into your bank account.
Your exact yield is the #20,000, which is the interest divided by the #180,000, which was deducted from your account.
Can I Roll Over My Investment?
The CBN doesn’t allow rollover, but your bank will be glad to help with that. All you need to do is give your bank a mandate to roll over the principal on your treasury bill when it matures.
You can also request the bank to reinvest the interest so that it can accumulate more money.
What If My Bid Was Rejected?
You don’t need to worry, as you can purchase Treasury bills from a secondary market, a broker. Sellers and buyers often trade notes in exchange for cash.
Can I Sell Before Maturity?
You can, but you run a risk of losing. If your face value is trading at a lower price, it won’t be advisable to sell your TB. But if the face value is high, you can make a little profit.
Unless it is an emergency, I won’t recommend selling your treasury bill.
Are Treasury Bills Taxable?
The answer is NO! Your profit is not subjected to tax.
Why You Should Invest In Treasury Bills In Nigeria
1. Good Income Stream
It is said that the rich have multiple streams of income. By investing in treasury bills, you create a source you will always cherish.
2. Safe Investment
When it comes to the safest investment you can ever make, think of Treasury Bills. There is no risk whatsoever.
Unlike some investments in Nigeria, TB is tax-free. It would help if you did not worry about the government taking an extra share from your pie.
Your treasury bill can serve as security, used for obtaining loans. You don’t need to use your land, car, or house when you have a treasury bill.
Instead of saving your money in the bank and getting monthly deductions, you can invest in Treasury Bills and save even more money.
If you have more than #50,000 lying in the bank, you need to put that money to work. Remember my rules; never allow your money to stay idle.
If you’re yet to grasp the concept of this investment, this video will, no doubt, help.
Over To You
If you’re interested in investing in Treasury Bills in Nigeria, the first step will be visiting your bank.
Find out the discounted rate, and check out other banks as well. When you discover an impressive rate, delve in immediately.
When you’re able to create multiple streams of income, you will find yourself in financial freedom.
If you’re still relying on your monthly paycheck or business, now is the time to create another income stream. You won’t regret it!
So, do you think you can start this investment?