Thread by @tosinolaseinde

What's a Treasury Bill?
It's also known as T-Bills
When the government needs money on the short term (< 1 year)

The govt issues this note to the general public and you need a minimum of N50 million to buy directly from the government. (CBN)
That market is called primary market

There is another market called secondary market.

Institutions crowdfund investments from as little as N100,000(minimum) from different players to purchase from CBN (N50 Million limit)

This is where you and I and other people who do not have N50 million YET buy from.

The key feature of T-Bills is that you get the interest payment upfront

So for example if you buy N100,000 TBills for 365 days at 12%

You will get N12,000 upfront
You will then get the N100,000 - capital - at the end of the 365 days

Another key feature is the risk
The Treasury Bill is backed by the federal government. This means that it is one of the most secured assets and the risk of default is low

It's also known as a risk free asset
Meaning your investment is safe

Another intetesting thing to note is that.
The longer the duration of the treasury bill.
The better the rates

E.g
The rate on a 50 days TBills is 10.35%
Whereas, the rate on a 323 days T-Bills is 13.70%
As of 28th of Nov 2018

Lastly, if you purchase T-Bills for 50 days at a rate of 10.35%

You won't get the total 10.35% because, your duration is just 50 days.

You have to apportion it for the duration held

That is
50/365 * 10.35% = 1.42%

To learn about other assets to invest in
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