I still struggle with finding ways of diversifying my income stream. Sometimes I wonder why I don't have that strength/zeal for business then I remember that I suck at interacting with human beings on a regular basis. SMH.
Instead of having my life savings sitting in my account doing literally NOTHING, I decided to look into investing the money in something risk free and eventually settled on Treasury Bills after much googling and consulting some bank official pals.
I have to say the interest on treasury bills is really goooood compared to the monthly interest my money fetches by sitting dormant in my account or the peanuts I would have gotten if I signed up for a fixed deposit at the bank.
If you're interested in investing in treasury bills in Nigeria especially through FirstBank Nigeria (if you have an active account with them), here are a few things you need to know or should I say this is how my first experience went.
NOTE: If you're wondering what the hell are Treasury Bills, please read this comprehensive article: A-Z of how to invest in Nigerian Treasury Bills.
To be eligible for the purchase of Treasury Bills (if you don't have N50 million), you need a minimum of N100, 000 to join FirstBank's pooled funds. See How to invest in treasury bills even if you don’t have N50 million for more details.
Simply walk into the bank and request a form and fill it out completely. It's basically a small form where you indicate your name, account details, how much you wish to invest and for how long you wish to invest the money.
Once you have applied, the money to be invested will be automatically deducted from your account. You will get a debit alert when this happens.
On the purchase form, you will be asked to indicate a bidding rate. I got confused here and the bank officer asked me to leave it blank as the bank would choose a rate on my behalf. Here I'm guessing that First Bank sets the rate for all pooled funds as it would be chaos to have different people in the pool with varied bidding rates. We that don't have N50 million to invest have no control over that. I stand to be corrected in the comment section.
If your bid is successful, interest is paid the very next day into your account. You will not get an alert for this. Just log into your bank account and check the credit section. You can calculate how much interest you MIGHT be paid using this app.
I said might because you can't be sure of the bidding rate your bank chose until the transaction is complete and your Treasury Bill Certificate aka Nigerian Treasury Bills Proof Of Investment is out.
Interest is paid based on the bidding rate you/your bank filed and not based on CBN's marginal rate i.e if CBN's marginal rate is 13% and your bank had bid at 11%, you will be paid interest at 11%.
I'm not sure if this applies to everyone or just those of us without N50 million. These charges will be indicated on the Treasury Bill certificate.
- Commission: 0.125%
- Custody Fee: 0.10% per transaction (per investment)
- Transaction Fee: N100.00 per transaction (per investment)
- VAT: 5% VAT on Commission, Custody Fee and Transaction Fees.
I didn't bother doing the maths above. All I can is that almost N2,000 was missing from my expected interest based on the bidding rate the bank chose. So I'm guessing that went into the charges above.
When To Invest
Sale of treasury bills happen every 2 weeks i.e at the middle and end of the month. This is subject to change though so you're better off asking your bank when exactly the sale is happening.
I made the mistake of applying 2 weeks before a sale so my money was basically making extra cash for the bank before the sale went through successfully.
If you've got questions/corrections, do please let me know in the comment section. Thanks.
UPDATE 17th August 2019: Six months later my treasury bills matured a few days back and I totally forgot. When I remembered, I casually logged into my bank account and there was my principal sitting pretty. First Bank doesn't send a credit alert when the money is deposited back into your account.
Overall, I enjoyed the experience and I will most likely be repeating it, if I don't find a better investment.
UPDATE 7th November 2019: Looks like treasury bills are no more for individuals and small firms. CBN stops treasury bills’ sale to individuals.
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