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Nairaland Forum / Nairaland / General / Investment / Fixed Deposits Or Treasury Bills, Which Is Better? (43820 Views)
Fixed Deposit Vs Treasury Bills: Which Pays Better? / Investing In Mutual Fund, Shares , Bonds Or Treasury Bills ? / Disappointing News! 2% On Fixed Deposits Confirmed (2) (3) (4)
Fixed Deposits Or Treasury Bills, Which Is Better? by Adesiji77: 10:42am On Jun 20, 2015 |
I have received several emails and calls from my readers asking whether to buy treasury bills or fixed deposits. Whilst, both are very good ways to invest your money there both have similarities and differences, which could work to your advantage depending on your investment preference. Let’s explore some. http://nairametrics.com/fixed-deposits-or-treasury-bills-which-is-better/ 20 Likes 6 Shares |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by adwem2003(m): 11:01am On Jun 20, 2015 |
You are 100% right. 4 Likes |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by NeilOssai(m): 11:04am On Jun 20, 2015 |
Well said. Tanx Op!!! |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:28am On Jun 20, 2015 |
I beg to differ. Treasury bills can be rolled over with ease. 3 Likes 3 Shares |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:35am On Jun 20, 2015 |
Caracta: You still need to instruct them to do so and it's possible for subsequent bids to be unsuccessful |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:38am On Jun 20, 2015 |
jaybee3: You need to instruct in the case of fixed deposits too. I've not seen a declined treasury bills roll-over request. Interest rates may differ, I agree. 2 Likes |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:39am On Jun 20, 2015 |
Caracta: Fixed deposits are rolled over by default Who am i to argue with you sef aunty caracta |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:43am On Jun 20, 2015 |
jaybee3: Lol. Fixed deposits should be rolled over ONLY at the instruction of the customer. That's the normal thing to do. I can sue any investment house (or bank) that rolls over my investment without my instruction. But then, who am I to argue with my uncle jaybee? Your experience pass my own. I'm a learner. 1 Like |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:50am On Jun 20, 2015 |
Caracta:I guess banks have different rules when dealing with both instruments. What i described has been my experience in the past few months |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:52am On Jun 20, 2015 |
jaybee3: Alright. I agree. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Ben1975(m): 12:11pm On Jun 20, 2015 |
Interesting What is the current average interest rate for treasure bills at present? Can I obtain any in bouble digits? Ben |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Seun(m): 12:44pm On Jun 20, 2015 |
So fixed deposits are riskier, and for that extra risk you get the privilege of earning lower interest rates. That makes them [seem like the wrong] choice. 3 Likes 1 Share |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Acidosis(m): 1:11pm On Jun 20, 2015 |
Wow, thanks sir! Could you please give us 'mathematical' instances? Assuming one buys treasury bills @#500,000, what should one expect over a period of 182 days? 365days? What happens when high inflation sets in and the economy is growing faster than planned for..? Is there any impact on those who earlier purchased treasury bills prior to high inflation? I understand interest rate varies in the money deposit banks and a limit exists as to what a customer can fix over a period of time (#500,000 right?) Where can one get the best interest rate? In short, which of the banks offer the best interest rate? 2 Likes 2 Shares |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 1:17pm On Jun 20, 2015 |
Ben1975:You can certainly obtain double digits for longer tenures 1 Like |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 1:22pm On Jun 20, 2015 |
Acidosis:Rates are adjusted in line with inflationary pressures at time of auction hence why it's advisable to go for shorter tenures when inflation outlook borders around uncertainty |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Acidosis(m): 1:38pm On Jun 20, 2015 |
jaybee3:Thanks for the explanations Can one walk into any bank to purchase treasury bills? If No, which options are available and who exactly should one meet? Thanks sir. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by themejiwalker(m): 3:07pm On Jun 20, 2015 |
What are the treasury bills interest rates please? |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 3:40pm On Jun 20, 2015 |
Acidosis:You can walk into your bank to place your order (no guarantee that it will be successful though if you insist on specifying your own preferred rates) |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Acidosis(m): 3:45pm On Jun 20, 2015 |
jaybee3:Okay sir. Thanks a lot |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 4:32pm On Jun 20, 2015 |
Seun: If you want a lesser tenor like 30 days, fixed deposit is a good option. It's a quick fix and it's flexible. Besides, how do you measure risk? Some commercial banks can be projected to be 'alive' for a couple of years. If you play your cards well, you can get higher interest rate than treasury bills that is not stable in rates. 1 Like |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 4:37pm On Jun 20, 2015 |
Acidosis: Any bank you have an account with. Visit the customer service desk. Not all banks allow you to bid. You just have to take the bank rate so it's difficult to speculate. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Acidosis(m): 5:14pm On Jun 20, 2015 |
Caracta:Thanks, I appreciate.. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by OCTAVO: 9:51pm On Jun 20, 2015 |
Nice thread. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by ogawisdom(m): 7:35am On Jun 21, 2015 |
TB interests r jst too low with rates generally below 12percent pa and one can get fixed deposits interest of up to 10percent pa n interest paid monthly n everything more flexible. Fixed deposits can be terminated quicker if there is an emergency n u get ur cash, it may take longer with TB. Fixed deposit is d better choice if u want quicker access to ur fund if there is an emergency 4 Likes |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 10:27am On Jun 21, 2015 |
ogawisdom: Thank you. You can even get 11% in fixed deposits depending on your bargaining power. It's more flexible. The only disadvantage I see is the tax on your interest. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 10:35am On Jun 21, 2015 |
Caracta: Bargaining power as in the size of deposit abi? Besides, it devoid common sense to tie large deposits into FD if CBN can only guarantee specific amount of money should the bank go bust 1 Like |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 10:39am On Jun 21, 2015 |
jaybee3: I can tie large deposits in 30 days and get my 10% rather than treasury bills for 91 days and end up with 9%. By the way, how many banks go bust in 30 days? By projection, some banks have going concern. They have the liver to remain for a long time e.g First Bank 8 Likes 1 Share |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 10:41am On Jun 21, 2015 |
Caracta:Are we still on treating these financial instruments as long term investment plans? |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 10:48am On Jun 21, 2015 |
jaybee3: For loooooong term, you can go the treasury bills way. But then, it's better the roll over option is used and not just plunge into long term. That way, you can enjoy interest rates increment (if any). Long term is 364 days, right? Just a year. |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 10:55am On Jun 21, 2015 |
Caracta: You don't necessarily need to do 364 days.. You could do 91 days to take better advantage of the parallel correlation of compound interest and favourable interest rates. Besides, you need to understand how the banks themselves are able to pay you interest on FD. They largely rely on TBills, bonds and commercial papers themselves as well as the elephant in the room (profits accrued from loans et al). In effect, if your investment plan is based on a longer term outlook then surely you are better off engaging in less risky asset class 2 Likes |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:06am On Jun 21, 2015 |
jaybee3: The banks have a rate guide (annually in some cases). So irrespective of the variations in bonds, tbills and the rest, the rates may not change. That's why even when treasury rates drop due to economic forces, the effect on fixed deposits could be zero or near zero. I agree with your last line. For long term, do treasury bills. If you don't have faith in your bank, do treasury bills. If you are very rich, do treasury bills or bonds. If you are confused, split your funds into equal halves. One for treasury bills, one for fixed deposits, same tenor (say 91 days). I always recommend this. 11 Likes 2 Shares |
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:10am On Jun 21, 2015 |
Caracta: What's the rate guide for FB on deposits >5M? |
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