Hi folks, have you wondered how treasury bills investment work? Did you know that treasury bill investment is one of the safest
ways to invest your funds? If yes, then I guess you are that curious to know how treasury bills work. If no, then I'll advice
you visit our comprehensive article on Understanding Treasury Bills in Ghana
which explains every nitty gritty of treasury bills.
Treasury Bills in Ghana currently have a 91-day, 182-day and
364-day fixed investments period and today I am going to show
you how the 91-day investment period works. So tag along and let's dive in.
What is a Treasury Bill?
A Treasury Bill or T-Bill, is a short term debt security made available by the Bank of Ghana (BOG). Treasury bills are
assigned a face value, and this is how much the bill is worth if held throughout the period. For Treasury Bills investment,
you buy the bills at a discounted price and hold them until the end of the period. Once the period ends, or reaches maturity,
you receive the face value. It's as simple as that. You gave the government a short-term loan by buying Treasury Bills, and
they paid you back with "interest" at the end of the period.
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What is 91-Day T-Bill?
A 91-day Treasury bill (T-bill) is a short-term debt instrument issued by the Bank of Ghana (BOG) with a maturity period of 91 days, or three months. T-bills are sold at a discount from their face value, meaning investors buy them for less than their eventual maturity value. When the T-bill matures, the government pays the full face value, and the difference between the purchase price and the face value is the investor's interest, or profit.What Are The Key Features of 91-Day T-Bill?
Low-risk
- Backed by the government, making them one of the safest investments.
Short-term Maturity
- Typically used for liquidity management or as a safe place to save cash for a short duration.
Tax Advantages
- Interest income is exempt from state and local taxes.
No Interest Rate Risk
- Sold at a discount and redeemed at face value, avoiding fluctuating interest rates.
- Not affected by interest rate changes during the investment period.
Easy to Purchase
- Can be bought directly from the government or through financial institutions.
- No need for a broker or complicated investment process.
Bank of Ghana 91-day Treasury Bill Rate (%)
24.3641
How Does This Rate Work For You?
Let's say you want to invest an amount of GHS300 into the 91-day treasury bill.To calculate your return on a 91-day Treasury bill (T-bill) investment, you can use the following formula:
Purchase Price = Face Value × (1 - (Discount Rate × Days to Maturity / 365))
Where:Face Value is the amount you will receive at maturity (in this case, GHS 300).
Discount Rate is 23.4554% (0.234554 in decimal form).
Days to Maturity is 91.
Let me calculate the purchase price and return for you or use our T-Bill Calculator.
If you invest GHS 300 in a 91-day Treasury bill at a discount rate of 23.4554%, your purchase price will be approximately GHS 282.45. Your return (profit) at maturity will be about GHS 17.55.
There you go. The profit is not much but then I dont think you had the thought of investing this low amount and reaping that much profit.
Tips To Earn More Profit in 91-Day T-Bill Investment
- You need to invest at least GHS500 to see improved profits
- Have a plan to re-invest initital money and accrued profits as many times as possible.
- Monitor this blog for updates on new and improved treasury bill rates.
- Have a plan to split your investment monies into two or more portfolios.
Frequently Asked Questions
A Treasury Bill is a short term debt security made available by the Bank of Ghana (BOG). In short, loans granted to the government by citizens of Ghana.
Treasury Bills with 91-day investment periods matures approximately 3 months.
Treasury Bills can be bought directly from the Bank of Ghana. Other renowned banks you can acquire T-Bills are GCB Bank, Ecobank, Access Bank, GTBank and Databank.
Yes. Infact, investing in Treasury Bills is one of the safest ways to invest your funds since it is backed by the government.
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