How to invest in treasury bills in Nigeria
Do you want to invest in treasury bills in Nigeria?
Are you interested in adding treasury bills to your portfolio of investments here in Nigeria?
Rest assured, treasury bills are some of the safest ways you can invest your money wisely in Nigeria.
Added to that, treasury bills have a very good return on investment or profit for investors and zero risks!
If you want to know how to buy treasury bills in Nigeria and invest in treasury bills, thereby cashing out and making more money, this post will guide you through.
In the following paragraphs, you will find answers to all your questions about how to invest in treasury bills in Nigeria.
I will also give you a free list of some 53 best businesses you can do in Nigeria today with little capital.
See Also: 7 Best Ways to Invest in Nigeria
- What are treasury bills?
- How are treasury bills sold?
- Where can I buy treasury bills in Nigeria?
- How can I invest in treasury bills in Nigeria?
- What’s the duration of treasury bills?
- Minimum amount to invest in treasury bills in Nigeria?
- When will I receive my interest on treasury bills?
- Benefits of investing in treasury bills in Nigeria?
- Who is eligible to invest in treasury bills in Nigeria?
- And many other
Without further ado, let’s delve into how to invest in Nigeria
Table of Contents
How to invest in treasury bills in Nigeria? What is a treasury bill?
A Treasury Bill (T-Bill) is a short-term government debt obligation backed by the Treasury Department of the Central Bank of Nigeria (CBN) with a maturity of one year or less.
Treasury bills are considered among the safest investments since they are backed by the full faith and credit of the Federal Government of Nigeria.
When an investor buys a Treasury Bill, they are lending money to the government.
The Nigerian government uses the money to fund its debt and pay ongoing expenses such as salaries and military equipment.
How to invest in treasury bills in Nigeria: How are treasury bills sold?
Treasury Bills sells bi-weekly in Nigeria.
There would usually be an auction by the Central Bank of Nigeria where investors can bid and buy treasury bills.Buyers would quote bids.
The average minimum bids will be selected.
It’s just like when contractors are bidding for a contract where the average minimum contractor will usually be considered.
How to invest in treasury bills in Nigeria: Where can I buy treasury bills in Nigeria?
If you want to buy treasury bills, there is usually an advertisement, inviting bids (investors) for the treasury bills securities.
These advertisements are placed in advance before the auction day.
To invest in treasury bills, you will obtain and complete application forms from an authorized dealer – usually Banks and Discount Houses and Stockbrokers.
So, you may want to approach a reputable stockbroker firm or your bank.
You fill the form with your personal information also indicating the amount you want to buy as well as your bid rate.
The easiest these days are through banks’ treasury bill mobile application.
What are the treasury bill’s bid rates?
Treasury bid rate is also called STOP RATE. The bid rate is a likely interest rate that you have indicated to receive for the principal that you are investing in the TB’s (or the main amount you invested).
You may, for instance, indicate an interest rate of 15% as your rate. Your bid rate will most likely be different from that of other intending buyers of TB’s.
But it will be within that range.
How to invest in treasury bills in Nigeria?
Prior to 2017, N10,000 was the minimum value required to invest in the Nigerian treasury bills auction in the primary market.
However, in 2017, the Federal Government increased the minimum value required for an investment to N50 million.
Don’t be scared by the millions! You can still invest with a much lower amount of money.
Mutual fund managers have designed products that help pool customers’ (a large number of investors with smaller funds like you and me) funds to meet the minimum N50 million investment thresholds.
The bank/broker will then apply to bid for treasury bills through the Central Bank of Nigeria and equally share the interest to all the fund contributors based on their personal contributions.
For example, an investment of N400,000 in a pool of funds that invested in the 364-day treasury bill, with an 18% interest rate, the bank/broker is expected to pay you N72,000 as your gross interest/profit earned.
Or they could just deduct N328,000 from your account as the investment.
The amount of securities being applied for must have a minimum value of N10,000 and in multiples of N1,000 thereafter.
Tenders for Treasury Bills are usually submitted on Mondays, Tuesdays, and Wednesdays before 1.30 p.m. on the prescribed printed forms and in a sealed envelope marked “Tender for Bills Or Certificates”.
How to invest in treasury bills in Nigeria: What’s the minimum amount to invest in treasury bills in Nigeria?
Prior to 2017, N10,000 was the minimum value required to invest in the Nigerian treasury bills auction in the primary market.
However, in 2017, the Federal Government increased the minimum value required for an investment to N50 million.
The good news is that you can still afford to invest in treasury bills if you do not have up to N50 million!
Thanks to the banks who have now designed products that pool funds from customers who are interested in investing in treasury bills in Nigeria but do have as much as N50,000,000 naira.
With funds pooled from a number of investors, banks can then use the funds to invest in treasury bills through the Central Bank of Nigeria with the stipulated N50,000,000.
What’s the duration of treasury bills in Nigeria?
The duration of treasury bills in Nigeria is for three months to one year: 91 days, 182 days and 364 days.
This means that CBN can hold your cash for as longs as 91 days (three months), 182 days (six months), or 364 days (one year) depending on your choice.
However, the CBN can decide they want to sell Treasury Bills for all the three durations or tenure available or either of the three.
See more information on that from the CBN
How to invest in treasury bills in Nigeria: When will I receive my interest on treasury bills?
The interest element of a treasury bill is paid to you upfront and credited to your bank account.
For example, if you purchase a N200,000 TB with an interest rate of 10% the CBN debits your account with N180,000 as such your N20,000 interest is paid upfront.
Upon maturity, you are paid the face value N100,000.
The upfront payment of your interest makes your true yield actually higher.
However, when you will receive your true yields depend on the number of days you choose in your treasury bills investment.
Benefits of investing in treasury bills in Nigeria
There are many benefits and advantages of investing in treasury bills in Nigeria.
- Treasury bills are safe to invest in because they are backed by the government.
- Treasury bills are a liquid instrument. This means they are short-term investments where you can get your returns within a short period of time. It doesn’t tie your money for a long time.
- Guaranteed returns
- Treasury bills have a low level of risk and zero chance of default
- It is convenient for investors as they are easy to order online and through a brokerage firm in Nigeria.
- Treasury bills are fixed-income investments and income from T-Bills is tax-free.
- There is a choice of products with different terms, including 1-year, 6-month, and 3-month maturities.
- T-bills offer benefits to governments as well, helping them to meet their borrowing requirements in a cost-effective way.
- They are affordable meaning that they can be purchased by people from all walks of life.
- Bills offer an acceptable level of returns for a safe investment vehicle.
Who is eligible to invest in treasury bills in Nigeria?
Any member of the public or any bonafide Nigerian can invest in the Nigeria Treasury bills.
Individuals, Corporate Bodies (Private and Public), Institutions (Private and Public), Banks, Discount Houses, and Brokers can all invest in treasury bills in Nigeria.
So, you can invest in treasury bills in Nigeria and so can I.
As promised, here is a list of the best 53 businesses to do in Nigeria today in case you want to delve into a profitable business.
- Transportation Business
- Delivery company
- Mobile Food Vendor
- Mini importation
- Drop-shipping
- Co-working spaces
- Short-stay apartments
- Yoga studio
- Anti-aging skincare line
- Solar energy sales and installation
- Animation expert on Fiverr
- Bakery Business
- Wine Production and distribution
- Make Money on YouTube
- Interior Décor
See the full list of the hottest business in Nigeria here.
