Finance

4 Disadvantages of Treasury Bills in Nigeria

One of the major concerns of every investor is to get an investment in which the risk of losing the capital when investing will never cross their mind, and I bet that Treasury bills investment will be a good recommendation here. Information guides Nigeria

It has always brought peace of mind to any investor to get themselves across any form of investment that is guaranteed by the Federal Government of a particular country, because it makes the investment official and a legal investment. Disadvantages of Treasury Bills

4 Disadvantages of Treasury Bills in Nigeria
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What is Treasury Bill ? source: bkumarauthor

Nigerian Treasury Bills are surely one of the best investments a Nigerian investor can ever get involved. jamb result

But before you start investing, how well do you consider eating from the national cake by investing in the Nigerian Treasury Bills as an investor? Dont you think you need to know what you stand to face by investing in Treasury Bills in Nigeria? Fruit Juice Production Process and Packaging

Read Also: Treasury Bills in Nigeria 2021; Overview, Interest Rates, Best Banks to Invest, Benefits and Disadvantages

An Overview of Treasury Bills in Nigeria

Treasury bills in Nigeria is one of the risk-free investments in Nigeria that has been a good investment opportunity for; individuals, organizations, firms, commercial banks (both private and public), financial institutions (both private and public), state government or local government, business-oriented entities and any other Corporate Companies can get involved in.

Treasury bills are Central Bank of Nigeria (CBN) issued investments and this is backed by the Federal Government of Nigeria (FGN), to fund deficiency in the national or government revenue.

The investment is a short-term bond that has a fixed term, and the period of the investment ranges from three months to a year, i.e. 91 days (3 months), 182 days (6 months), and 364 days (1 year).

One of the amazing truths about Nigeria’s Treasury Bills is that securities are guaranteed by the Federal Republic of Nigeria which give investors the peace of mind that their capital are in safe hands.

The smart investment is tax-free and give individuals or Corporate Companies the assurance that their interests, after the period of investing will not be reduced by taxation. NNPC recruitment

Treasury bills also written as T-Bills is one of the safest and well-secured investments to ever get  involved in, but this investment also has it cons which investors must always take into consideration before investing.

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List of Some Banks that you can Invest Treasury Bills

The investor can make use of any of the below-listed banks to invest in Treasury bills in Nigeria:

  • First Bank.
  • Unity Bank.
  • Zenith Bank PLC.
  • Fidelity Bank.
  • Sterling Bank.
  • Stanbic IBTC Bank
  • Access Bank
  • Eco Bank
  • Union Bank
  • FCMB Bank.
  • Guaranty Trust Bank (GTB).

The Life of an Investor

The joy of an investor is to bounce on the surface of gold, when the interest made on the capital that is used for an investment yield a great increase. Therefore, finding a good form of investment is a major concern of a good investor.

A top-notch interest is always the deal for every investor. Just as it is good to look for a very advantageous investment for an investor, the same way it is also good to check out the demerits of every investment before dabbling into it.

Before you stand a chance to regret your decision of investing in Treasury Bills, take your time as an investor to check out some disadvantages of choosing the Nigerian Treasury Bills. dollar to Naira rate

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Disadvantages of Treasury Bills in Nigeria

Before you invest, take note of the following disadvantages of Treasury Bills in Nigeria. 20 Easy Services to Render and Make Money in Nigeria 

1.  Not Advisable for Low Capital Investors

One of the things investors must take note of, is that the interest rate for investing in Treasury Bills is around 11.6% to 15%. With the rate of interest, it will be very hard for low capital investment to make a good win.

The Treasury Bills are always given out to the lowest bidder when investors are trying to invest on just a Treasury Bill, and this means there wont  be much increase for anyone putting in a low capital into the investment and considering the interest rate.

In Nigeria, the minimum amount an investor can invest is ₦50,000 and the maximum to invest is ₦5,000,000. This means any investor having less than ₦50,000 or more than ₦5,000,000 will not have the chance of investing.

Therefore, as an investor, note that you wont be able to stand the chance of investing in the Treasury Bills if your capital is not up to ₦50,000.

Know your worth before you invest.

2. Attract Low Rates of Return

Investors hoping to have high or fixed rates of returns should note that the Treasury Bills are subject to high inflation risk.

Treasury Bills are perceived to be good for keeping capital and for making a steady low rate of income for a wealthy person, and thus, not a good option for an investor that is just trying to build wealth.

However, no matter the inflation, the capital is always safe and the investor will surely have access to his/her capital at the end of the investment period, although the interest of the investment cannot be predicted.

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3. Investment cannot be rolled over

Rolling over of investment is not done automatically by the Central Bank of Nigeria. The Investor has the chance of rolling over any investment only by contacting the Bank through which he is making investment after he has been paid the interest for the first investment.

Therefore, the first investment done has to be paid before an investor can proceed to make another investment. More so, an investor will incur a cost each time he makes a bid on Treasury Bills.

4. Inconsistent Policies made by the Central Bank of Nigeria (CBN)

Since The Treasury Bills can easily be influenced by the policies made by the Federal Government through the Central Bank of Nigeria, Investors stand to be affected whenever policies change. JAMB CAPS

Due to the inconsistent economic status of Nigeria, Central Bank tends to make policies that may affect the bidding rate of the Treasury Bills and this may affect the interest of investors.

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Wrapping up

In conclusion, investors must make full research on any investment they want to embark on, and they must check both the good side and bad side of it to know if they stand the chance of making a profit after the investment period.

If you are an investor looking for a well-yielding, high rate interest then you need to go for another investment plan other than Treasury Bills.




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Kolapo Victor

Kolapo is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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