₦airaland Forum

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

I can see your footie knowledge is sonewhat limited

Check out lee cattermole
Joey barton
Vinny Jones

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

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

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

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?

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

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

I vote the following peeps:

Snazzy5050
Wenson
Akposy
Agarawu
sosiqdude
Iamkingzlee
Tomfrench
Kizmarty

CC: NLJega

Shior!

Attention seeking mongrel

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

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

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

Caracta:
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.

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

Caracta:
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.

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

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 having going concern. They have the liver to remain for a long time e.g First Bank

Are we still on treating these financial instruments as long term investment plans?

Caracta:
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.

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

MEILYN:
Lmao... Baba, this girl no be chop and clean mouth ooo. She is here to stay bro. I go dey chop but she go still dey. Lol

Stop pussyfooting about then... Ask her out!

What's the worst that could happen?

You better do quick before awon top shooters take the girl off you

Really?

EFCC back from the dead

Setaje:
Hmmmn I really haven't seen any successful marriage, even the ones that decide to stay. They are just enduring because of the shame and out of all my friends, I can only boast of one who is happy in her marriage, the rest are just stories that touch. Add all this stories to the ones we read on blogs and all other social media. Jaybee3, something must be terribly wrong o. Isn't anybody happy in their marriage again or happy couples are afraid to come out. Chaiiiiiii

Thank God you know someone who appears to be happy in her marriage. Fact of the matter is, there are many people enjoying their marriages even though as expected they face challenges at different times in the marriage. This shouldn't really alarm you if you acknowledge that fact that nothing is ever going to be plain sailing since we all have different characteristics and the only thing bringing us together is the marriage phenom.

Now here is the realistic definition of a good marriage. A good marriage isn't one without challenges but one with less challenges after aggregating all the highs and lows.

Quit using blogs, NL or whatever to define what a marriage should be like. Marriage is a unique journey that should be shaped to suit couples as they deem fit.

Setaje:
Am just so scared of getting married God. What is this. My heart can't take all this o. God

What ever happened to those successful marriages, why wouldn't you use that as your measuring stick?

okosodo:
Old man, shut up and work

That's all you could deduce from the alarming interview?

I really pity you and your generation!


Here is something to ponder on though, the true state of economy according to the transmission committee suggests we are now in debt to the tune of 7T naira.

How then are you going to pay it back since it's pretty obvious we have to continue running budgets in deficits and the long term economic outlook of our major source of income appears extremely dire (persistent low prices, inability to find buyers for our crude and the world gradually reducing its dependency on fossil fuels)

Acidosis:
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.

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)

Acidosis:
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..? CBN sells treasury securities, right? Is there any impact on those who earlier purchased 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 (#500,000 right?)

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

Ben1975:
Interesting

What is the current average interest rate for treasure bills at present? Can I obtain any in bouble digits?

Ben

You can certainly obtain double digits for longer tenures

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? Your experience pass my own. I'm a learner.

I guess banks have different rules when dealing with both instruments.

What i described has been my experience in the past few months

Caracta:
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.

Fixed deposits are rolled over by default

Who am i to argue with you sef aunty caracta

Caracta:
I beg to differ. Treasury bills can be rolled over with ease.

You still need to instruct them to do so and it's possible for subsequent bids to be unsuccessful

standd:
Some of the men reading this are guilty of the things I have mentioned and they know it. As for those who don't have access to this, it will take time, but they will all be reached.

You can't base your judgement/conclusions solely on the views they submit on NL. NL can't be a good scientific sample when it's obvious some people deliberately post to hold opposing views

How exactly do you plan to educate people that are largely divided along faith as well as controlled by books written eons ago?

standd:
I will drive home the point again:::


NIGERIAN MEN ARE HYPOCRITES

Thank you

How about the wives, sisters and mothers that harbour them?