CBN treasury bills rate are investments you should consider, if you are looking for ways to make money in Nigeria.
Treasury bills in Nigeria are short-dated Nigerian government securities, which will yield no interest with a maturity less than a year. Usually, the Nigerian treasury bills are issued at a discount on its redemption price.
Treasury Bills of Nigeria are short-term securities issued at a discount rate for a tenor ranging from 91 to 364 days, in a way that the income received is the among the retail price along with the amount received at maturity or before the sale, according to the Central Bank of Nigeria.
To get Treasury Bills, all that an investor must do is to visit any of his/her bank branches, fill and submit an application form, provide its bank-account, the total amount to be invested from his bank account along with the preferred tenor.
Treasury bills are among the investment areas available through banks and it allows customers to invest in high-yielding assets, which are non-risky and tax-free.
These are good investments for idle savings, which yield big returns in less than one year, and treasury rates are also very liquid and can be converted to cash quickly.
According to the report on thestreet stated that the Treasury Bills are the among the best shortest-term Treasury securities, people can invest and matures in a year (from the time they are issued). Thus, the Treasury issues 3- and 6-month bills per week as well as a one-year bill (the so-called year-bill) every month.
As described above earlier, Treasury Bills are discount instruments. Instead of making interest rates, they are issued at a discount rate to face value and mature at face value (Normally less than a year). Interest rates are the purpose of the purchase price, the amount paid to the holder at maturity and the time remaining till maturity.
Bills are quoted as regards to their discount rate, or monthly interest based on one year. As the bond yields and the discount rates are rising, the bill is losing value. A “bond-equivalent yield” may be calculated for the bill, to allow for an evaluation to other debt instruments in the treasury bills market.
In addition, based on another report on howstuffworks,Treasury Bills are also referred to as “T-bills” which are securities issued by the federal government. When you buy one, you are considered to be lending money to the government. Here, the word security means any medium useful for investment, such as bills, stocks or bonds.
Treasury Bills have a face value to a certain amount, which is what the bills are actually worth from the time they were issued. But they are sold at a discount. For example, an invoice will be worth N10,000, but you’ll buy it for N9,600.
Every bill carries a specified maturity date, which is when you will have the money-back. Therefore, the Government will then pay you the actual price of the bill, in this case N10,000, and you earn N400 from your investment.
The amount that you earn is considered the interest, or your payment for your loan of your money to the government. The real difference between the value of the Treasury bill and the total amount you paid out for the bill is called the discount rate; hence it is also set as a percentage. In my example given above, the discount rate is 4 %, because N400 is four percent of N10,000.
Treasury Bills are considered one of the safest types of investment in the world since they’re supported by the government. They are seen as risk-free investment, and are also used by many other governments around the world.
Important things about saving your money
In regards to the report on thefinancebase, saving money is beneficial to the owner, because it provides people the opportunity to earn interest while keeping their money safe. Investing money can be dangerous, on the other hand it offers higher returns than bank savings accounts and can help people build wealth for a long-term.
Savings accounts and also other savings vehicles, for example, fixed deposit are also useful since they give you the ability to earn interest on the savings, while you’re at little to no risk investment.
Even as the rates are usually low, the amount earned in interest is invitation for saving. Savings accounts and your money market accounts are created to provide the account holders access to their money any time.
However, keep in mind that fixed deposits impose a penalty to the owner if the fund is withdrawn earlier before the expiration date of the certificate, but generally this type of savings has higher interest levels than ordinary saving accounts.
In conclusion, the advantage of investing will be the opportunity it provides for building your wealth in the long-term. Diversification can be a risk-minimizing concept that spread money among different types of investments that may offset losses in a single investment type with gains in another.
Due to risk-free investment in treasury bills, the returns on the investments are typically higher than those on savings accounts.
The only drawback in Treasury bills is that you won’t have a great return because Treasuries are exceptionally safe. Corporate bonds, certificates of deposit and your money market funds can give higher interest levels.
Also, you will probably not get back your entire investment if you cash out before the maturity date. In fact, you can understand why Treasury bills (T-bills) is a smart investment to the individual investors, and it is an important factor when you think about short and long investment in Nigeria.