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Best investment options in Nigeria

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Are you looking for areas to invest money in Nigeria and do so with peace of mind? Here are some of the best Investment options in Nigeria:

FGN Bonds

Government Bonds offer the best investment options for people who seek security and safety of their money while creating enduring wealth.The Debt Management Office (DMO) issues FGN Bonds in Nigeria on behalf of the Federal Government.  The tenor of FGN bonds is long and ranges from two to 20 years. The government issues the bonds to raise money to finance projects such as roads, railways, housing, power, and other infrastructures, etc.

Minimum subscription to FGN Bonds is usually NGN10,000 and multiples of NGN1,000 thereafter.

Interest is paid semi-annually until maturity date when the principal is paid. An investor who does not want to wait till maturity can sell the investment at the secondary market.

The secondary market for bonds in Nigeria is the FMDQ OTC platforms and the Nigerian Stock Exchange. DMO does primary auctions for FGN Bonds on a monthly basis while the secondary trading takes place on a daily basis.

To invest in the FGN Bonds, contact your stockbroker for guidance.

FGN Savings Bonds

The Federal Government of Nigeria launched the FGN Savings Bonds in 2016.  The FGN Savings Bond is a retail investment programme. Its purpose is to provide Nigerians of all income levels the opportunity of contributing to national development by lending to the government.

It is also intended to make savings attractive to the average Nigerian.

Minimum amount you can invest is NGN5,000 and maximum  is NGN50,000,000.  FGN Savings Bond tenor ranges from two to three years and primary auctions are conducted on monthly basis. Like the FGN Bonds, there is a secondary market for Savings Bonds at the Nigerian Stock Exchange which means that if you don’t wish to hold to maturity, you can exit by selling at the NSE.

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FGN Savings Bonds is one of the best investment options for low income earners who want to build wealth over time with a good measure of safety and by earning reasonable returns on their investments.

Interest payable ranges from 11 to 13 per cent which is far above what you can get from a regular savings account in a commercial bank in Nigeria.   This is tax-free and the bonds can be used as collateral to obtain loans from the banks.

Want to invest? Contact your stockbroker.

Treasury Bills

One of the best investment options, Treasury Bills (TBs) are short dated instruments issued by the government through the Central Bank of Nigeria (CBN) to control money supply as well as provide short term funding for the government.

The CBN auctions TBs bi-weekly in tenors of 91 days, 182 days and 364 days. There is also a secondary market for this security in the money market.  The money market comprises of the banks and other financial institutions dealing in short term instruments..

Treasury Bills are the most liquid and safest investment instruments you can find in the money market.  They offer guaranteed returned and are risk-free because they are backed by the full guarantee of the Federal Government.

How does it work?

A Treasury Bill has a face value which is the actual amount the bill is worth at maturity.  However, the bills are usually sold for less than their face value.

For example, if you buy a Treasury Bill for NGN100,000, you may pay NGN90,000.  On maturity of the investment, you will receive NGN100,000, meaning you have earned a NGN10,000 interest on your investment or  a 10 per cent return.

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The unique thing about TBs is that you earn your interest upfront which effectively increases its true yield.

The interest you earn on Treasury Bill is called the stop rate and this is determined by the Central Bank of Nigeria on every auction day.

The CBN determined the stop rate by selecting the bids that fall below the marginal rate.

Wondering how you can invest?

It is very easy to enjoy this investment opportunity in Nigeria. Simply walk into your bank and collect the necessary forms.  The rest of the whole process is easy as your bank will guide you through the process.  You can also approach your stockbroker.

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