Want to save money and plan for your future? Nigerian government Treasury Bills and Bonds might be a good choice. They’re safe ways to invest your money and can help it grow over time.
What are Treasury Bills and Bonds? How do they work? Let’s explain it simply.
What are Treasury Bills?
Treasury Bills, or T-Bills, are short-term loans to the Nigerian government. When you buy a T-Bill, you’re lending money to the government for a short time, usually between 91 and 364 days.
Here’s how it works:
1. You give your money to the government for a set time.
2. When that time is up, you get your money back plus extra (interest).
3. For example, if you invest ₦100,000 for 91 days at 5% interest, you’ll get ₦105,000 back after 91 days.
What are Treasury Bonds?
Treasury Bonds are similar, but they’re for longer periods, from 2 to 30 years. With Bonds:
1. You lend money to the government for a longer time.
2. You get regular interest payments while you wait.
3. At the end, you get your original money back too.
For instance, if you invest ₦250,000 in a 10-year Bond at 10% interest, you’ll get ₦25,000 every year for 10 years. After 10 years, you also get your ₦250,000 back.
Differences between Treasury Bills and Treasury Bonds
| Treasury Bills | Treasury Bonds | |
| Tenor | Short-term (91 to 364 days) | Long-term (2 to 30 years) |
| How to Get Returns | One payment at the end (principal + interest) | Regular interest payments + principal at the end |
| Payment Frequency | Once, at maturity | Usually twice a year for interest, plus principal at maturity
|
| Interest Calculation | Discount from face value | Fixed percentage of face value |
| Best used for | Short-term savings, lower risk tolerance | Long-term investment, desire for regular income |
| Easy to Sell | Very easy to sell quickly because they’re short-term | Can be sold if you need money, but it might take longer and be harder than T-Bills |
| Minimum Investment | Often lower minimum investment | Usually higher minimum investment |
| Interest Rate Risk | Lower due to shorter-term | Higher due to longer-term |
Why Choose T-Bills and Bonds?
1. They’re safe: The government promises to pay you back.
2. Regular income: It gives you money regularly.
3. Variety: It’s good to have different types of investments.
4. Easy to sell: If you need money quickly, you can usually sell these investments.
How to Start
You can buy T-Bills and Bonds from the Central Bank of Nigeria by visiting the nearest Sterling Bank branch, or simply do it online.
To start, you’ll need to:
1. Open a Sterling Bank account.
2. Show your ID and proof of address
Remember: Before investing, learn more about what you’re buying. Understand the risks and ask for help if you need it.
T-Bills and Bonds can be a great way to grow your money safely in Nigeria. They’re simple to understand and can help secure your financial future.
For more investment options, check out some offers from Sterling Bank.
