Treasury bills are getting popular among the investing public. They are one of the safest investment options available, generating a decent return. If you’re looking to start investing (or you just want to learn more) but you have no idea what a treasury bill is or how it works, you will find this post very valuable. So, what is a treasury bill?

Treasury bills are short-term sovereign debt instruments, maturing in one year or less, issued by the Federal Government through the Central Bank to provide short-term funding to the government. Think of it as a loan you are providing the Federal Government. The government will then pay you back in 90, 180 or 365 days, depending on the maturity period of your choice. With Treasury bills, however, your interest is paid to you upfront. How? If you loan the government 100k for instance at an interest rate of 10%, you will receive the interest of 10k at the point of subscription. At maturation, you will then receive back your initial investment of 100k, meaning you have invested a total of 100k and received 110k back with an upfront interest of 10k at maturation.

But are treasury bills a profitable investment? To answer this, let’s look at all the factors to consider when purchasing treasury bills. To invest in treasury bills, you must be willing to lock in your funds for the given maturity period. There are sanctions (in form of deductions) if you liquidate (withdraw) before the end of the maturity period you subscribed for. Next, treasury bills are not dirt cheap. Most treasury bills subscriptions begin at 100k, 500k or 1 million nairas. Are you able to lock away this amount for 90, 180 or 365 days? Finally, we consider return rates. In comparison to similar investments, treasury bills frequently perform excellently, returning as high as 17% returns. The funds are risk-free, as they are backed by the full faith of the Federal Government.

Treasury bills are a very stable investment vehicle due to their very low risk and the integrity of the issuer. They provide investors with an opportunity to grow their holdings safely and securely.

SOURCE:https://brandspurng.com/2019/10/21/all-you-need-to-know-about-treasury-bills-2/