Treasury bills are amongst the easiest & safest means of making personal investments. Governments issue treasury bills as a way of raising or borrowing money from the public.
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.
Howdo treasury bills work? Treasury bills have a face value. This face value isthe actual amount that the Treasury bill is worth. However, treasury bills areusually sold for less than the face value. For example, if you buy a treasurybill for ten thousand Naira, you may pay just nine thousand eight hundred nairafor it. When the maturity date of the Treasury bill comes, you will receivethat total face value of ten thousand Naira. This means that you made twohundred Naira from your Treasury bill investment.
Ifyou 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 touchwith your bank and you will be put through. You can buy treasury bills for aslow as N1, 000 and in multiples of N1, 000 after that.
Youcan invest your T-Bills for 91 days, 182 days or 364 days. This means forexample that, if you invest for 91 days, your investment will mature afterthree months. If you invest for 182 days, your investment will mature after sixmonths and so on.
Apartfrom being a safe way to invest, treasury bills have many other benefits:
• Number one, you earn interest. Thisinterest can be paid to you upfront.
• Treasury bills are a good source ofsteady income. They are affordable and almost anyone can invest in them.
• Treasury bills can easily be convertedto cash. This means that you can easily sell your treasury bills to someoneelse.
• They can also be used as a collateralfor bank borrowing
Sowhen thinking about ways to of investing your money, you may want to considerinvesting in treasury bills. It’s an easy way to get the money you already haveto earn more for you.
Thishas been courtesy FSDH Merchant Bank Plc as part of The Bankers CommitteeFinancial Literacy Public Enlightenment Programme brought to you by The BankersCommittee, comprising all the commercial Banks in Nigeria and the Central Bankof Nigeria, CBN.