Fixed deposit vs Treasury bills in Nigeria: which is better?

The quest and desire of Nigerians to make money from business investments cannot be overemphasized. Most Nigerians are confused about the right business to invest their money and finances. Some have fallen victims to scams and fraudulent programs such as MLM, referral programs, networking programs, and the internet Ponzi schemes. Some other people have identified a good option of investing their money, either through fixed deposits or treasury bills.

This is the reason why we would outline on both options so that our readers will know the best option between fixed deposits and treasury for them to invest their money and reap the benefits. In this article, you will get to know if you would invest your money in a fixed deposit account or to opt for treasury bills.

You should know that both options (Fixed deposit and treasury bills) have their differences and similarities. No one is actually better than each other but any of them could work for you depending on your investment choice and preference.

First, there is a need to know the meaning of fixed deposit and treasury bills. A fixed deposit account is an account which provides its owners (investors) a high rate of interest until the given maturity date of the account. The fixed deposit account requires a particular figure or sum of money to be kept or saved for a given date; the funds cannot be withdrawn or cashed out by the investor (account owner) before the maturity date.

The fixed deposit account is very popular in Nigeria; also, it is offered by almost all the commercial banks in Nigeria. Major commercial banks in Nigeria such as First Bank of Nigeria (FBN), First City Monument Bank (FCMB), Stanbic IBTC Bank and Union Bank of Nigeria offer the option of fixed deposits account for its clients, customers and investors. Fixed deposit accounts are common and popular investment options in Nigeria because it is a safe investment and it attracts interest rates bigger than that of savings accounts.

On the other hand, treasury bills are short-term debt instruments which are issued by the Federal Government of Nigeria through the Central Bank of Nigeria (CBN)to provide short term funding for the government. When you buy treasury bills, you are lending money to the Federal Government of Nigeria (with the help of the CBN). There is a promise to pay back your money in a period of 91 days, 182 days or 364 days. But in the vase of a fixed deposit, you are lending money to a financial institution or a bank and there is a promise to repay your money at the expiration of the tenor.

NB: If you wouldn’t like to lend out your money to the government, you can try out a fixed deposit.

Are there any risks involved?

Yes, every business investment comes with risks. Treasury bills is primarily back-up by the government, and it is classified to be almost risk-free because a government can decide not to pay its loans even if its bankrupt or not. Also, the government has a tax revenue system which they can use to repay its loans.

But on the case of fixed deposits which is backed by the bank. When the bank borrows from you, it does not give you any form of collateral but it is obligated by law to pay you your interest. If a bank fails to pay up your interest or if it happens to liquidate, depositors may lose all or some part of their money.

In this case, treasury bills would be the best option for you if you are looking to minimize the risks involved. If you are looking for an investment which which you can roll over easily, you are recommended to go for fixed deposits.