How To Make Money By Investing In Treasury Bills |

Thursday, October 20, 2022

How To Make Money By Investing In Treasury Bills

How To Make Money By Investing In Treasury Bills

Today, I will be enlightening you on how you can make money by investing in Treasury bills, but am very sure you will be asking me this question, What is the meaning Treasury Bills? I will explain all you need to know about treasury bills, how they work and how you can make money by investing in Treasury bills in this post. 

What are Treasury Bills? 

Treasury Bills are short-term debt instruments issued by the Federal Government through the Central Bank to provide short term funding for the government. They are by nature, the most liquid money market securities and are backed by the guarantee of the Federal Government.

Simply put, you borrow the government your money and they pay you back with interest after a certain period of time. 
Treasury bills are backed by the guarantee of the Federal Government.

One of the best ways to invest money is to purchase 'assets' that either create income, increase in value, or do both. And this is where Treasury Bills come in.

This is how Treasury Bills works

The Federal Government issues treasury bills at discounted prices for maturity periods between 91 and 364 days. At the end the selected maturity period, the government buys the bills back at full price. For example, let’s say, you buy a 182-day 200,000 treasury bill at a discounted rate of 180,000. 

The Federal Government writes an IOU for 200,000 and agrees to pay back in 182 days. You don’t get any monthly interest payments, rather you make your money back when the bond is purchased back from you at full price. In this case the T-Bill pays 11% interest rate (20,000/180,000 = 11%) over the 182-day period.

Note that you will not get any alerts or notifications on your investment until the end of your tenure, so you need be patient. You only get a debit notification when the money is taken out of your account, and a credit notification when the money is returned at the end of the tenure.

Where can I purchase Treasury Bills?

Treasury Bills are sold at commercial banks and official agents such as merchant banks, so you can walk into any of your bank's branches and tell a cashier you would like to buy Treasury Bills.

What is the minimum purchase amount for Treasury Bills?

Some banks offer a minimum of 50,000, while some offer a minimum of 500,000. Find out from your bank officer or walk into your bank's branch to find out.

How long can I invest for?

There are 3 tenures available: 91 days, 182 days or 364 days.

What are the advantages and disadvantages of investing in Treasury Bills?

There are many advantages to investing in treasury bills. 
One is that you don’t need much money to buy them, like you do for other assets like real estate or other businesses.

The biggest advantage of treasury bills is that they offer high interest rates, in fact right now, treasury bills have the highest interest rates of any investment type.

Also as Treasury Bills are based in full faith of the Federal Government, they are considered one of the most secure investments to make. They can also be used as collateral, and are accepted by all banks. 

As of the time of writing this post, there is no observed disadvantage of investing in Treasury bills. 

So,  you can invest in Treasury bills today for a brighter financial future tomorrow. 

If you have any questions, ideas or suggestions, feel free to use the comment box below to tell us whats on your mind.

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