Millennials

A lady on Twitter recently narrated how subscribing to the Federal Government of Nigeria Bond helps her to save enough money for her house rent each year.

According to the lady whose name is Geraldine Iquo Okon‏, before now, she was doing ‘Ajo’, a monthly contributory saving scheme which is popular among women and traders. But she later realised that that wasn’t the perfect way to save. 

And then she discovered the FGN Bond, which now enables her to save and get a little interest every month. This is an opportunity she never enjoyed when she was with her ‘Ajo’ group. Now, she doesn’t worry about paying her rent.

See her tweet below:

Her tweet stirred a debate 

Following her tweet, some of her followers argued that the FGN Bond doesn’t cater to low-income earners. Therefore, the ‘Ajo’ favours more low-income earners than the bond.

But the lady argued that  even low-income earners can benefit from the FGN Bond even though it is fixed for long term. Moreover, it is not risky, even as it yields an interest at the end of the investment.

Furthermore, she stated that the risk that comes with ‘Ajo’ isn’t worth risking her money for, as the FGN bond remains the safest method of saving.

What are FGN Bonds? – An FGN Bonds are debt securities (liabilities) of the Federal Government of Nigeria (FGN) issued by the Debt Management Office (DMO) for and on behalf of the Federal Government.

The FGN has an obligation to pay the bondholders the principal and agreed interest as and when due. When you buy FGN Bonds, you are lending to the FGN for a specified period of time.

How safe is the FGN Bond – FGN Bonds are considered the safest of all investments in domestic debt market. This is because it is backed by the ‘full faith and credit’ of the Federal Government and as such, classified as a risk-free debt instrument.

They have no default risk, meaning that it is absolutely certain your interest and principal will be paid as and when due. The interest income earned from the securities is tax exempt.

5 COMMENTS

  1. I want to know more about FGN Bonds. The interest rate? I also want to know about Treasury bills. Tell me, how can I start investing? Please reply. Thanks.

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