SEMINAR RECAP ON THE TREASURED ENTREPRENEURS ASSOCIATION “TEA” HALL OF WEALTH GENERAL ACTIVE GROUP PAGE…..
👉🏼Theme:
❤ How to invest in TREASURY bills in Nigeria and become super RICH….
🎤 FACILITATOR/SPEAKER/DISCUSSANT
🗣Mr Ibrahim Tijanni….
Good evening ladies and gentle men on this great entrepreneurs platform…
Trust we all had a good day…
Very sorry for starting this seminar very late like this…
Because our topic for tonight is a very wide topic and also what most of us don’t even reason to see as an investment..
But without taking much of our time….
Let me start by talking about Treasury Bill…
Treasury bills are short term bonds issued by the Federal government through the Central Bank of Nigeria to meet short term funding for the government. Banks, trusts, institutions, firms, and even individuals can purchase these particular bonds…
The Central Bank of Nigeria issues the bonds for 91 days, 182 days, and 364 days at a primary market auction and investors come to place their bids to buy them, the lowest bidders carry the day…
Now to one Big question people do ask..
Is Treasury bills a good investment?.🤷🏼♀🤷🏼♀
Before an investor makes any investment, he must first determine whether the available business opportunity is viable. He should establish the strengths and weaknesses of that particular opportunity, and then make a decision based on the findings.
Now let me answer the question with the advantages and disadvantages of treasury bills…
Advantages
- These short term bonds are very liquid and can be converted to cash quickly.
- Interest earned is exempted from taxation.
- The investment is risk-free because of the guarantee of the Federal Government.
- Investors can use it as collateral when applying for loans in banks.
- Interest is paid upfront…
Lets all look at the above advantages very well…
For we that always have it in mind to go for a loan or obtain a loan from the bank…
But we are always faced with the issue of bank collateral…
Let us now assume we have one way or the other invested in treasury bill…
With our investment, we already have a collateral to stand as back up for us…
As we all know, nothing in this world that has advantages that will not have disadvantages…
Disadvantages of Treasury bills in Nigeria
- Returns are most often than not, a little above the inflation rate
- Investors cannot roll over investments. They have to incur a cost each time they make a bid….
Buying Treasury bills in Nigeria
T-Bills can be purchased either in primary or secondary markets. A primary market involves a direct purchase from CBN through a public auction carried out bi-weekly. On the other hand, the secondary market is when an investor buys it from an existing holder, and this could be through a bank or stockbroker….
Banks and other financial institutions usually hold Treasury bills, and there are two ways of investing in this opportunity as a secondary market. An investor could decide to buy Treasury bills in Nigeria banks or get it through stockbrokers. Investment via banks is simple and the most reliable. Investors need to get in touch with their banks and they will be put through. However, the bank determines the minimum bond you can buy. Whereas some offer N50,000 as a minimum, others go as high as N500,000, but this should not worry you because you can opt for an alternative route. Some banks pull together resources from many investors to raise enough money and buy these bonds. You could get in touch with such and make your investment….
To round up this seminar,let me just talk about how to calculate treasury bills in Nigeria…
How to calculate Treasury bills in Nigeria
Remember that the Federal government issues Treasury bills at discounted prices and upon maturity, the government repurchases them at a full quotation.
For example, a person buys a N300,000 Treasury bill at a discounted rate of N200,000 for 364 days.
After the purchase, the Federal government writes an IOU (I owe you) of N300,000 and pledges to pay after 364 days. Upon expiry of the set timeline, the government buys back at full price. The interest rates for these bonds are not fixed.
The Central Bank of Nigeria and the demand for the T-Bills determine the stop rate. Anyone putting their money aside would want to know how much they should expect at maturity. It is only possible if you know how to calculate your return on investment.
Check the example below. Suppose you buy a 364-day T-Bill worth N300,000 from a stockbroker or your bank at an interest rate of, say, 15%. It could be more or less.
You can calculate the upfront payment using the formulae below.
Interest = Principal × Time × Rate/100
Principal = N300,000 Time = 364 days (equivalent to 1 year)
Rate = 15/100 N300,000 × 1 × 15/100 = N45,000
This, therefore, means that you will get paid N45,000 at the start of your investment and the remaining N255,000 is remitted to the Central Bank of Nigeria.
The figures above should tell you that your investment is N255,000 and not N300,000 because you get N45,000 back. How then do you determine your actual rate of return?
Rate = (Interest × 100)/ (Principal x Time) (45000 × 100) ÷ (255000 × 1) = 17.6%
This is how you can determine your interest rates on Treasury bills in Nigeria.
Investing in Treasury bills in Nigeria is simple. However, as an investor, you need to familiarize yourself with the business first before you can venture into it. There is more interesting information about these bonds that will impress you….
This is where I will drop the anchor for tonight seminar….
Thank you and God bless….
TREASURED ENTREPRENEUR ASSOCIATION 