In view of this, when you buy a treasury bill, you are lending the government money for a short while. At the end of the agreed period, which is called the maturity date, you get your money back with interest.
The longer the maturity date, the better the return on investment. T-Bills are one of the safest ways to invest your money because they are backed by the government.
How do treasury bills work? Treasury bills have a face value. This face value is the actual amount that the Treasury bill is worth. However, treasury bills are usually sold for less than the face value. For example, if you buy a treasury bill for ten thousand Naira, you may pay just nine thousand eight hundred naira for it. When the maturity date of the Treasury bill comes, you will receive that total face value of ten thousand Naira. This means that you made two hundred Naira from your Treasury bill investment.
If you are interested in investing in treasury bills here’s how to go about it. Treasury bills can be bought through your bank – the process is simple. Get in touch with your bank and you will be put through. You can buy treasury bills for as low as N1, 000 and in multiples of N1, 000 after that.
You can invest your T-Bills for 91 days, 182 days or 364 days. This means for example that, if you invest for 91 days, your investment will mature after three months. If you invest for 182 days, your investment will mature after six months and so on.
Apart from being a safe way to invest, treasury bills have many other benefits:
• Number one, you earn interest. This interest can be paid to you upfront.
• Treasury bills are a good source of steady income. They are affordable and almost anyone can invest in them.
• Treasury bills can easily be converted to cash. This means that you can easily sell your treasury bills to someone else.
• They can also be used as a collateral for bank borrowing
So when thinking about ways to of investing your money, you may want to consider investing in treasury bills. It’s an easy way to get the money you already have to earn more for you.
This has been courtesy FSDH Merchant Bank Plc as part of The Bankers Committee Financial Literacy Public Enlightenment Programme brought to you by The Bankers Committee, comprising all the commercial Banks in Nigeria and the Central Bank of Nigeria, CBN.
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