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Fixed Deposits Or Treasury Bills, Which Is Better? - Investment (2) - Nairaland

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by OCTAVO: 11:13am On Jun 21, 2015
I think I've learnt a lot from Caracta. I prefer a 30 day tenor FD to a 91 day tenor TB.

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:15am On Jun 21, 2015
jaybee3:


What's the rate guide for FB on deposits >5M?

Rate guide gives you the window rate. You just can't give a customer above those rates. Also, these rates depend on the principal and most importantly, the tenor (30, 60, 90, 180 or 365 days). The rates for banks vary. Sterling bank could be different from Fidelity, GTB, Zenith or Firstbank.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:16am On Jun 21, 2015
Caracta:


Rate guide gives you the window rate. You just can't give a customer above those rates. Also, these rates depend on the principal and most importantly, the tenor (30, 60, 90, 180 or 365 days). The rates for banks vary. Sterling bank could be different from Fidelity, GTB, Zenith or Firstbank.
Stop being a banker dammit!

I like numbers....give me something to work with
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:21am On Jun 21, 2015
OCTAVO:
I think I've learnt a lot from Caracta. I prefer a 30 day tenor FD to a 91 day tenor TB.

This is largely dependent on the principal.

Which do you think makes the best mathematical/financial sense if accessibility of funds wasn't a factor, 5% FD or 9% Tbills on a principal of 500k

You need to understand that you had only be able to unlock best FD rates if you have very large fund to invest

1 Like

Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:23am On Jun 21, 2015
jaybee3:

Stop being a banker dammit!

I like numbers....give me something to work with

Lmao. Let me know the tenor. Told you that's important as well. What's the point of giving you a rate guide that could be different from what is obtainable at your bank?

@octavo, thanks. Just weigh your options and be sure your bank is giving you a good rate. Then compare the two. Do the calculations yourself. Some 91 days treasury bills could be better than 30 days fixed deposits and vice versa. It all depends on the rate. It's your money. Weigh your options and don't rush.

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 11:25am On Jun 21, 2015
Caracta:


Lmao. Let me know the tenor. Told you that's important as well. What's the point of giving you a rate guide that could be different from what is obtainable at your bank?

@octavo, thanks. Just weigh your options and be sure your bank is giving you a good rate. Then compare the two. Do the calculations yourself. Some 91 days treasury bills could be better than 30 days fixed deposits and vice versa. It all depends on the rate. It's your money. Weigh your options and don't rush.

I will come and find you in few weeks time.....

I kuku know where you work

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 11:31am On Jun 21, 2015
jaybee3:


I will come and find you in few weeks time.....

I kuku know where you work

Yes boss. Emphasis on "few weeks".
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by UjSizzle(f): 12:03pm On Jun 21, 2015
Caracta:


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? tongue Your experience pass my own. I'm a learner.
Your head like sue as if the acceptance form doesn't include terms of investment. If you don't give instructions to terminate, your investment and accruing interest is automatically rolled over at the prevailing IR.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 12:09pm On Jun 21, 2015
UjSizzle:

Your head like sue as if the acceptance form doesn't include terms of investment. If you don't give instructions to terminate, your investment and accruing interest is automatically rolled over at the prevailing IR.

That's what I'm saying. If I choose the terminate option on my acceptance or opening form and you roll over, that's a breach in contract. So it shouldn't be rolled over by default.

I can also decide to roll over just the principal and get interests accrued at every maturity. Or roll over both and get nothing until termination.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Bibol(f): 11:46pm On Jun 21, 2015
OCTAVO:
I think I've learnt a lot from Caracta. I prefer a 30 day tenor FD to a 91 day tenor TB.

A 30 day tenor is better, it allows for more flexibility in case you change your mind after a few months. But be sure to inform your bank to rollover both the capital and interest accrued

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by ogawisdom(m): 6:48am On Jun 22, 2015
Caracta:


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 tongue

Dnt mind TB guys Some banks will never go down gtb, zenith, uba, first bank. TB these days r jst too low to worth all dt goes wit it. If it were d days one can get TB on 18percent n above I will say ok but these days of 9percent on TB hell no
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by ogawisdom(m): 6:51am On Jun 22, 2015
Caracta:


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 tongue

Dnt mind TB guys Some banks will never go down gtb, zenith, uba, first bank except d world is coming to an end. TB these days r jst too low to worth all dt goes wit it. If it were d days one can get TB on 18percent n above I will say ok but these days of 9percent on TB hell no.

With interests on FD coming monthly n if one can get 10percent pa n decides to do compound interest d total yield at d end of d year will surely beat d best interest on any TB. D good days of TB is over n useless now and to tink d least tenor is 91days makes it riskier self.

Only dummies do TB nw lipsrsealed

1 Like

Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 5:16pm On Jun 22, 2015
I still don't get how FD can be better than Tbills if FD rates only becomes competitive if the investor have huge deposit to play with

See the illustration below

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 5:49pm On Jun 22, 2015
@jaybee3, what's the 7% for?

Then the last auction 10% figure, where is that obtainable? CBN?
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 5:58pm On Jun 22, 2015
Caracta:
@jaybee3, what's the 7% for?

Then the last auction 10% figure, where is that obtainable? CBN?

FD => https://www.accessbankplc.com/daily-deposit-rates

TBills => http://www.cenbank.org/rates/govtsecurities.asp
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 6:16pm On Jun 22, 2015
jaybee3:


FD => https://www.accessbankplc.com/daily-deposit-rates

TBills => http://www.cenbank.org/rates/govtsecurities.asp

You should try other banks with options as high as 10% on FD for 30 days, then compare with the last auction of treasury bills of 91 days of a bank as low as 9.5%.

7% is daylight robbery!
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 6:22pm On Jun 22, 2015
Caracta:


You should try other banks with options as high as 10% on FD for 30 days, then compare with the last auction of treasury bills of 91 days of a bank as low as 9.5%.

7% is daylight robbery!

Do you know any bank that will offer 10% FD for <=1M principal?
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 6:36pm On Jun 22, 2015
jaybee3:


Do you know any bank that will offer 10% FD for <=1M principal?


Yes I do. Tenor is an important factor as well.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 6:56pm On Jun 22, 2015
Caracta:


Yes I do. Tenor is an important factor as well.

Name the bank na

My calc was based on lowest tenor for either inv class.

Obviously banks would add a lil extra for longer tenor which will most certainly be insignificant once the compound factor of the other kicks in
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 6:59pm On Jun 22, 2015
jaybee3:


Name the bank na

My calc was based on lowest tenor for either inv class.

Obviously banks would add a lil extra to longer tenor which will most certainly be insignificant once the compound factor of the other kicks in

I don't need to name any bank. I already told you it all depends on your bargaining power and how you negotiate. The decision lies in the hands of the banker who must not exceed the rate guide. I can decide to give someone 10% and give another 6% under the same condition. It all depends on what I'm after. This is business.

Lowest tenor for t.bills cannot be 10%. I've seen 8% and lower.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 7:04pm On Jun 22, 2015
Caracta:


I don't need to name any bank. I already told you it all depends on your bargaining power and how you negotiate. The decision lies in the hands of the banker who must not exceed the rate guide. I can decide to give someone 10% and give another 6% under the same condition. It all depends on what I'm after. This is business.

Lowest tenor for t.bills cannot be 10%. I've seen 8% and lower.
The link i provided for access bank had a range published meaning they are willing to be flexible. I get that but what i'm failing to grab is how a bank will offer rate higher than Tbills for their lowest denom tenor.

The economics just doesn't make sense when it's evident that they will also have to use the deposior's cash to reinvest in the same risky asset class in order to get enough margin to satisfy both customer and shareholders


The calc was a snapshot using the most recent published figures.
A lower TBills will obviously translate to lower FD rate. I'm sure you know they are all being driven:determined by the same economic factors

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 7:06pm On Jun 22, 2015
jaybee3:

The link i provided for access bank had a range published meaning they are willing to be flexible. I get that but what i'm failing to grab is how a bank will offer rate higher than Tbills for their lowest denom tenor.

The economics just doesn't make sense when it's evident that they will also have to use the deposior's cash to reinvest in the same risky asset class in order to get enough margin to satisfy both customer and shareholders

T.bills is a good option. Either primary or secondary.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by whyniel: 8:32pm On Jun 22, 2015
jaybee3:


Name the bank na

My calc was based on lowest tenor for either inv class.

Obviously banks would add a lil extra for longer tenor which will most certainly be insignificant once the compound factor of the other kicks in

I know of First Bank Ikota main branch. I negotiated 10% for a principal <1m though the negotiated tenor is 60days.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 8:51pm On Jun 22, 2015
whyniel:


I know of First Bank Ikota main branch. I negotiated 10% for a principal <1m though the negotiated tenor is 60days.

That's a good one. <1m.

Now imagine 9% for 91 days on t.bills. I'm glad someone else has a first-hand experience.

cc jaybee3 and Seun.
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by bukatyne(f): 8:54pm On Jun 22, 2015
ogawisdom:
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

TB seems to make more sense except if the ROI is also pa and not per tenure.

12% pa for FD is 1% monthly minus 10% tax.

1 Like

Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 8:56pm On Jun 22, 2015
Caracta:


That's a good one. <1m.

Now imagine 9% for 91 days on t.bills. I'm glad someone else has a first-hand experience.

cc jaybee3 and Seun.

The tenor as stated was 60 days
There is also the tax deducted from the accrued interest
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Caracta(f): 9:12pm On Jun 22, 2015
jaybee3:


The tenor as stated was 60 days
There is also the tax deducted from the accrued interest


And I'm telling you 10% on 30 days is obtainable. Deduct all the interest and charges in this world, it would still be better than t.bills of 9-10% on 91 days.

Primary t.bills in today's Nigeria is overrated IMO. Investors should learn to explore their options. Secondary t.bills is even of a better yield and advantage (if you are lucky).

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by jaybee3(m): 9:30pm On Jun 22, 2015
Caracta:


And I'm telling you 10% on 30 days is obtainable. Deduct all the interest and charges in this world, it would still be better than t.bills of 9-10% on 91 days.

Primary t.bills in today's Nigeria is overrated IMO. Investors should learn to explore their options. Secondary t.bills is even of a better yield and advantage (if you are lucky).
Let's deal

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Desanta(m): 2:06pm On Sep 02, 2015
TBs are far better than FDs in Nigeria going by the present rates per annum.
A TB of 10% for 91 days has an actual yield of 11.1 percent because the interest appears to be paid upfront.
A FD for 3months at 10% has a true value of 9% because of the 10% withholding tax that will be collected from the interest.
Even a non mathematician can easily figure it out. However, it all depends on the disposition of the investor at the end of the day.
I practically live on my interest from TB and I invest my salary.

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Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Justinatoyin(f): 7:38pm On Jan 17, 2016
If you want a lesser tenor like 30 days, fixed deposit is a good option. It's a quick fix and it's flexible. Come to Rosabon financial services limited yaba. Contact me 09052285801, 08138882950
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by starnobility: 8:38am On Jun 12, 2016
Alright thanks
Re: Fixed Deposits Or Treasury Bills, Which Is Better? by Dejiih001(m): 7:37am On Aug 22, 2016
Thanks OP for this topic

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