Everyday Money Matters (EMM) is live on @lagostalks913 every Wednesday between 7.30am-8.00am. On the show, we give answers to questions from our listeners and those sent to us.

Here are the questions we treated in today’s edition.

Question

Uche a caller wants to know how the interest rates on treasury bills are calculated and is it the same across all banks?

Answer

Ugodre says interest rates are primarily set by the CBN and not banks. CBN sets interest rate based on what people want to pay. They have 91 days, 182 days and 365 days treasury bills with different interest rate, which is at the primary market. Buying from the bank is called secondary market. You can go to FMDQ website and check what treasury bills yields are going for general. Rates at the secondary market vary with each bank while in the primary market is usually uniform.

Question

Ruth wants to know how much interest she will be paid on treasury bills of a N100,000 for 181 days.

Answer

Ugodre says

No of days/365days x interest amount

180days/365 x 18000 = N8,877

Ugodre does a recap of the various asset classes. He says cryptocurrencies did well massively last year but has lots of risks. This morning bitcoin dropped below $10,000 from about $17,000 sometimes late last year. It is very volatile. Treasury bills are also a good investment as they have low risk.

Next is FGN bonds, FGN bonds are of two types; FGN savings bond, which is for retail investors, you need as little as N100,000 or N50,000 to invest. The other one is FGN bonds, which is for people with bigger investable income. FBN bonds yield returns of about 17% while FBN savings bond yield returns of 12% per annum. We also have corporate bonds i.e, bonds of Blue Chip Company. Their credit rating is close to that of the government. Their yields are higher, about 21% and they are riskier than FGN bonds.

If you don’t have time you can invest in a mutual fund. A mutual fund invests in a mix of everything.

Real estate is another investment class. You must forecast what the area might be like in 10 to 15 years, the role of the government, Is the private sector investing there? You can also buy and sell after a few months. Land values hardly drop but property values change.

Finally, collective investment schemes, this can be friends, colleges, family coming together to invest in anything like beauty salon, stocks, cryptocurrencies or even lend money. All agreements should be drawn up. The advantage of a collective scheme is you take part in big ticket transactions.

Here is a link to today’s thread.

Opinions expressed on Everyday Money Matters (EMM) are not to be interpreted as financial advice. Please consult your investment adviser.