ON THE MONEY: Gains Of Investing In Treasury Bills

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In a world of financial insecurity, especially, as vulnerable as that of an average private sector employee in Nigeria, investment is a crucial way to build financial buffers and secure your future. Investing’ is more than building rainy day savings. It is the potential for healthy long term returns and beat inflation.

Every income earner (no matter how little) can invest in securities even with the smallest amount of funds in his/her disposal. Government bills, notes, and bonds, also known as Treasuries, are considered the safest investments in the world and are backed by the government, according to the U.S. Securities and Exchange Commission. Brokers sell these investments in N100 increments, or you can buy them yourself at the banks.

The reward for taking on risk is the potential for a greater investment return. The fluctuations of investment returns without sacrificing too much potential gain is another encouraging factor. In this article, we pick Treasury Bills as an investment of choice for some Nigerians, with a focus on how they are making money from investing in Treasury Bills. Treasury Bill a short term investment securities issued by governments to finance national borrowing requirements.

A Nigerian journalist and investor, Bayo Amodu described it as one of the elementary forms of investing with minimal risk, a reason it is called fixed income securities. As an investor in the security, you will know your interests at the point of investing. Your returns on investment is guaranteed. Your yield (interest) on the T-Bills investment is redeemable upfront, you can decide to automatically reinvest it for a higher income. The yield or Income on the investment is very competitive with returns on other money market instruments of similar maturities.

Mr Amodu said investing in T-Bills “is still better than just leaving my money in my bank accounts,” despite some of the discouraging factor of high inflation and current low interest rate on T-Bills.

But what is the attraction to T-Bills? “The attraction for me in T-Bills is that my profit is guaranteed although it might be small. I can collect the interest upfront or decide to take it at the maturity stage. It is also easy to invest in, all I need is to go to my bank and authorize my banker to move funds from my account into T-Bills investment,” Mr Amodu in an interaction with this reporter.

T-Bill is a short term negotiable bill of exchange used by governments to help finance national borrowing requirements. It is quoted for purchase/sale in the secondary market on an annual percentage yield to maturity and usually issued at discount. Treasury bills are short-term sovereign debt securities maturing in one year or less. They are sold at a discount and redeemed at par. These bills are by nature, the most liquid money market securities and are backed by the guarantee of the Federal Government of a nation. The Federal Government of Nigeria, through the Central Bank of Nigeria, issues Nigerian Treasury Bills to provide short-term funding for government budget deficit.

Amodu has companion in John Obofe said investment in Treasury Bills is one that is rewarding, stating that no matter the low value of the investment securities, the risk remains under its gains. In Treasury Bills, returns on investment is guaranteed. “Your yield(interest) on the T-Bills investment is redeemable upfront, you can decide to automatically reinvest it for a higher income. The yield or Income on the investment is very competitive with returns on other money market instruments of similar maturities.”


Investors can purchase treasury bills at a bank, through a dealer or stock broker, or online from a website of Securities vendors. The bills are usually issued through an auction bidding process, which occurs weekly or monthly. Treasury bills are now issued only in electronic form, though they used to be paper bills.

The treasury bills are usually issued through a competitive bidding process, quoted and traded on FMDQ OTC securities exchange and Nigerian stock exchange platforms, among others.

Government treasury bills can be procured by individuals at a discount to the face value of the security and are redeemed at their nominal value, thereby allowing investors to pocket the difference.

Any member of the public can invest in the Nigeria Treasury bills; individuals, corporate organisations (private and public), institutions (private and public), commercial banks, discount houses, and stock brokers. Investing in treasury bills is by auction Subscriptions at the market for 91,182, 365 and 730 days.