Pls, explain to us the differences between treasury bills, commercial papers and FGN bond. The positive and negative sides of each of them, and which one is more advisable to take position.
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Pls, explain to us the differences between treasury bills, commercial papers and FGN bond. The positive and negative sides of each of them, and which one is more advisable to take position.
Treasury Bills (T-Bills) You’re basically lending money to the government for a short time (about 3 months to 1 year). You earn a fixed return at maturity. Very safe and predictable, returns are usually lower Commercial Papers (CPs) Here, you’re lending money to companies, not the government, for thRead more
Treasury Bills (T-Bills) You’re basically lending money to the government for a short time (about 3 months to 1 year). You earn a fixed return at maturity.
Very safe and predictable, returns are usually lower
Commercial Papers (CPs) Here, you’re lending money to companies, not the government, for the short term.
Higher interest than T-Bills
Slightly higher risk since businesses can face challenges
Federal Government of Nigeria Bonds (FGN Bonds) This is lending money to the government for a longer period (years instead of months). You receive interest regularly and get your capital back at the end.
Steady income and relatively safe, your money stays invested longer.
See lessOk, good evening Treasury bills is you borrowing the government money for a short term (within one year) , the government uses the money to build or finance infrastructure and laters pays you back your money (capital) with interest but a 10% withholding tax will be deducted automatically While CommRead more
Ok, good evening
Treasury bills is you borrowing the government money for a short term (within one year) , the government uses the money to build or finance infrastructure and laters pays you back your money (capital) with interest but a 10% withholding tax will be deducted automatically
While
Commercial papers is you borrowing money to companies not government and it’s for short term always within 6 months
It’s comes with interest rate higher than treasury bills and FGN bonds.
Because you are lending to a company not government, it’s more risky. But that does not mean you shouldn’t invest. And its taxable at 10% withholding tax.
While
So the positive and negative accompanied is 😊
Firstly, investment comes with risk, without risk, investment is not complete
As for treasury bills is backed with full faith of the federal Republic of Nigeria, the government must to pay you but it has a lower return compared to commercial papers and FGN bond.
While commercial papers, a particular company may not do well after borrowing funds from the public which may cause delay in payments, etc.
FGN bonds comes with a lower return compared to commercial papers, but is backed by the full faith of the federal republic of Nigeria and one important good thing is that, it can be used as a collateral to get loan from the bank if you don’t have a landed property
So if you cannot really take risk, you go for tresurry bills, if you need to preserve you capital while earning steady returns, you go for FGN bonds, but if you can tolerate high risk in order to gain higher returns, you go for commercial papers
Thank you.
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