MissJennifer:

Nice piece, I read somewhere that you can invest as low #10,000 in Tbills( actually it was an advertisement for FG Tbills) but your post says otherwise, how so?

ednut1:
d advert was for bonds. tbills 100k, bonds 10k

davide470:
Nice One Ednut1
Yeah, that's the "Legalised" minimum for Bonds and Mutual Fund.

ednut1:
better pass savings account or inside pillow or mattress na , and its withholding tax free

ednut1:
Nigeria Treasury Bills Auction Results – 05.08.2015

05-08-15 abi 15-08-15?

How far ednut, I intend investing 100k on Treasury Bills, how do I go about it?

FriedPlantain:
05-08-15 abi 15-08-15?

How far ednut, I intend investing 100k on Treasury Bills, how do I go about it?

ednut1:

get the form from your bank, fill and submit. a lien will be placed on your account to the tune of the amount your investing. auctions are held every fortnight.

FriedPlantain:
what is the current interest rate that accrues to Treasury bill investment and is there anyone you know of that would get me higher interest within a similar period of time. You are an investment banker, right? advise me bro.

ednut1:
Financial Discipline is difficult but can be achieved and mastered. The need to feel among sometimes makes one to spend on things like the latest iphone, latest car, exotic holidays etc then in 5 years times you may have racked up lots of debt despite earning much over the years. The need to save and invest cannot be overemphasized. A typical Nigerian worker saves in his savings account (that has no Debit card aka Atm card) that offers a return of 2-3% per annum but with inflation rate currently at 9.2% per annum (and still rising) this is just cheating of because your money is losing value. A wise investor aims to earn above the inflation rate. N50, 000 in August 2014 is not of the same value with N50, 000 today. Some of the different ways you can effectively save and invest your salary / money are explained as follows:

Voluntary Contributions are additional contributions you can add to your mandatory pension contributions. These funds would be deducted from your monthly emolument by your employer and remitted into your Retirement Savings Account (RSA), along with your regular pension contributions.The significant advantage of VC over other savings scheme is the contribution is deducted before tax thereby reducing your tax liabilities. Note that income (not the contribution) earned on Voluntary Contributions is subject to Personal Income Tax if withdrawn within 5 years.It is advisable to withdraw quarterly; bi- annually or yearly and Withdrawal takes 2-3 weeks to process.The contributions are managed like your pensions. The smart workers also pay their bonus into the VC to avoid tax.

Simplified illustration

Mr Seun Earns N200, 000 per annum taxed at 21%, he decides to make VC of N70, 000 monthly.

Take home pay (THP) without VC
TAX-N200000 *21%= N42000
THP= N200000-42000= N158000

Take home pay with VC of N70000
Tax-(N200000-70000)*21%= N27300
THP = N130000-N27300=N102700+(N70,000 VC)

Tax savings= N42000-N27300=N14700

Mr Seun is getting a tax saving of N14700 monthly from this scheme. (For those who know how to compute standard take home pay add the annualized VC to your pension’s contributions).

Treasury bills and bonds
Tbills are short term debt instrument issued by the Central Bank of Nigeria (CBN) on behalf of the Federal Government to finance local debt, Because it is guaranteed by the Federal Government of Nigeria, it attracts lower returns. Primary T-bills auction takes place every fortnight with tenor of 91,182 and 364 days(note that the rates are per annum e.g. a 91 day Tbill at 10% is effectively 2.5% when prorated). The results of the last auction were around 10%, 12.80 and 13% respectively for the tenors. Banks invest heavily in Tbills with your money and give you 2-3% interest per annum on your savings account (nice righyt). Interest is effectively paid up front. To invest in Tbills get in touch with your bank and fill the application form.
FGN bonds are debt instruments issued by Government of Nigeria for an agreed period of time. The investor lends an amount of money to the government and earns interest (bi-annually) on the investment until the maturity of the bond when the principal will be returned. Bonds have maturities ranging from 5-20 years. Bond auctions are held monthly.
To invest in Tbills and bonds get in touch with your bank and fill the application form. Minimum investments of N100, 000 and N10,000 respectively. the interest earned on both are tax free.

Mutual Funds: these are collective investment schemes where funds are pooled together and managed professionally by a fund manager (Asset management Company). Using this logic Mr A has 100k to invest in fixed deposits he approaches a bank and is offered 8% interest, if Mr A and 10 of his friends contributed 100K each and take the N1, 100,000 to the same bank they can negotiate and get 10% on the same fixed deposit. There are different types of mutual funds. A Mutual Fund invests in a variety of stocks, bonds, money market instruments or other securities in line with the objective of the fund. A popular and safe type of mutual fund in Nigeria is the Money market fund which invests in money market instruments like Tbill, fixed deposit and commercial papers. Returns around 11-13% presently.ARM, Stanbic Asset mgt, FBN capital & investment one are solid asset management firms in Nigeria. There are mutual funds that invest in equity, bonds, Tbills, fixed deposits, commercial papers (usually a mixture of these securities). With as little as N5000-N50000 you can invest part of your salary (say monthly) and get good returns.

Fixed deposits: these are investments with bank for a agreed period of time. Note the rates are per annum and will be prorated if the tenor is not up to a year. It also attracts withholding tax .

Shares: these are investments that represent equity ownership in a company which gives right to voting and share of the profits(dividends) of the company. The best times to invest in shares is when the prices are low (e.g. now) and sell when the prices are high or better still hold position and keep receiving dividends. Shares can offer huge returns or losses as the case may be at the particular period in time (economic condition and Company performance/direction).

Be wise

Source: Experience

topacs:
@ Ednut1 thanks for this piece, my question is, are there any interest on the voluntary contributions ((or is it just to avoid tax)) if yes what do u think would be the rate if som1 decides to save 80k monthly to his voluntary contribution in the next 6 months. Thanks.

Imnotalone:
You can also earn money by doing little tasks online

http://Invite2Money.com/?ref=4575

ednut1:
take this crap off here. Big scam. One penny u wont get. Mind u i fell nearly fell for it in 2006.