There are three non-risky and highly rewarding investment portfolios in the banks through which customers can be assured of getting some profits if they invest their savings in them.
The portfolios are treasury bills, bonds and tenured deposits.
All that the customer needs to do is to go to any of his/her bank’s branches, fill and submit an application form, state his bank account, amount to be invested from his bank deposit and the preferred tenor.
Treasury bills are short-term debt instruments issued by the Federal Government through the Central Bank of Nigeria to provide short-term funding for the government.
In simple terms, investing in treasury bills is the process of lending money to the government, with the prospect of collecting it back with interest, usually within a year.
It is one of the investment areas accessible through banks to enable customers to invest in high-yielding assets, which are non-risky and tax-free.
Treasury bills offer investors attractive and competitive interest rates on investments and are backed by the guarantee of the Federal Government.
They are usually issued for tenures of 91 days, 182 days and 364 days, but banks usually specify the minimum amount the depositors can invest.
Interests that investment in treasury bills yield are credited into the customer’s bank account.
They are good investments for idle savings, which yield returns, and they are also very liquid and can be converted to cash quickly.
Treasury bills have no transaction costs and can also be used as collateral for loans.
If the depositor needs his money before the maturity date, he can convert it to cash but will not be paid the full promised amount.
A major disadvantage of treasury bills is that the returns may not be as high as what may be obtainable in highly risky ventures. Notwithstanding, it has the advantage of earning assured profits.
Bonds, on the other hand, are debt instruments issued by the Federal Government to raise funds for capital projects.
As an investor, you can lend the government the amount you are investing in bonds and earn interest (coupon) every six months until the maturity of the bond when the principal amount will be repaid.
Bonds assure the investor of the principal amount at maturity and periodic interests.
Payment of interest is through issuance of cheques or warrants, which are similar to the dividend warrants for shares.
This form of investment is not risky because it is guaranteed by the government.
Bonds are typically long-term investment, but you can decide to sell them off on the bond market if you want to quit.
The interest earned is tax-free and banks usually specify the minimum amount that can be invested in bonds.
Tenured or fixed deposits allow the customer to keep the money in the bank for a certain period of time.
The investor is paid monthly interest, while he receives the principal amount at maturity.
Customers can have access to the funds invested before the maturity date by terminating the fixed deposit.
Instead of leaving your idle cash in savings accounts, which will earn you little interest, or current account where your bank will be deducting charges, you may consider investing your money in one of the investment portfolios.
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