The depreciation of the shilling (103 shillings to the dollar at the time of writing) is also encouraging people to choose the safer investment option offered by Treasury bills.
NAIROBI, KENYA, 14 OCTOBER – Are you looking for a profitable and low-risk investment idea? Are investment ideas that offer quick returns appealing? Find out more about the business of investing in Treasury bills. to introduce.
Treasury bills, or simply T-Bills, are paperless short-term borrowing instruments issued by the government through the Central Bank of Kenya to raise funds on a short-term basis for up to one year.
“Normally, when a government needs to borrow money, it borrows from the people by issuing Treasury bills or Treasury bonds. They are categorized according to time period,” said Francis Mwangi, an analyst at Standard Investment Bank Kenya.
The central bank then issues banknotes at a discount or face value in weekly competitive auctions.
“Discount pricing means that the instrument is sold to an investor for less than its face value and is redeemed at maturity for its full face value. The difference between the discounted price and the face value determines the yield or interest earned.” This is stated on the CBK website.
Interest rates, as high as 22%, continue to tempt people despite these difficult economic times.
The depreciation of the shilling (103 shillings to the dollar at the time of writing) is also encouraging people to choose the safer investment option offered by Treasury bills.
“If you compare the interest rates offered by the money market and bank fixed deposit accounts, you will see that there is a rush to invest in treasury bills because the interest rates on treasury bills are much higher,” Mwangi explained. do.
But how exactly can you profit if you choose to invest in Treasury bills?
According to the central bank's website, the minimum face value for investors is Sh100,000 and any other additional amounts must be in multiples of Sh50,000.
However, although the estimated value is Sh100,000, investors are offered a discount and may be able to purchase the note for much less than that.
“Suppose you buy Treasury Bills worth $100, but you are offered a discount to buy them for Shs93,000. The government will give you Shs100,000 back, so this is where you make money,” Mwangi said. explained.
Governments have been successful in providing these types of discounts to their citizens through means of investing the funds obtained.
If you choose a 91-day Treasury bill, CBK will use a three-month average interest rate to adjust the interest rate on your loan or bond as economic conditions change. They then add a certain percentage point, or a fixed margin, to set the interest rate that must be paid to investors. Additionally, as interest rates rise, so do the interest rates on loans (such as Treasury bills) and associated corporate bonds. Therefore, this guarantees a return on your invoice.
Mary Wainaina, a Nairobi resident and investor, said she has benefited from investing in Treasury bills and would advise others to follow her example.
“Treasury bills offer better interest rates than the majority of investment plans offer me. They're also safe, which means my money is safe,” she says.
And with government support, she's right. T-Bills are guaranteed by the government, making them a very safe investment.
So, if you choose to trust Capital FM Business and invest in Treasury Bills, the process is very easy.
Once you find out the government's announcement about weekly auctions in national newspapers, invest in an electronic and easy way.
However, you must first open an account with CBK where the transactions will take place.
“However, central banks need to work on the process of issuing accounts to individuals because it is very time-consuming. This alone can deter people from investing,” Wainaina explains.
But she advises Kenyans to start investing in Treasury bills en masse, a sentiment echoed by Mwangi. “We advise Kenyans to invest in Treasury Bills, which are safe and relatively liquid. Unlike land, which is not immediately liquid, Treasury Bills guarantee money back in as little as 91 days. Masu.”
