Drops of Water

 Drops of Water

I wonder what drops of what can do to my room if it is continuous for days, weeks, months and even years. I know people say that little drops of water make the ocean someday. Still wondering, I asked myself, why people work for years and immediately or after some time when they stop work they don’t just have what to fall back on. It could be as a result of ignorance, yes, I think this should be the answer. If people are equipped with the knowledge of the investment options that they have, this will encourage them to save for luxury or for the raining day.

One of the investment options is investing in government bonds. With a publication from the Debt Management Office, i am encouraged to write this. Government bonds are a medium-to-long-term debt instrument with maturity of two years and above. It is a contract of lending money while an economic agent lends money with the obligation to pay interest periodically and to repay the principal at maturity.

FGN Bonds is Federal Government of Nigeria certificate of indebtedness. It is considered as risk free as payment of interest and principal is guaranteed by the FGN.

The morale  beyond the issuance of bonds are:

• To find part of its expenditure that is not covered by its revenues (fiscal deficit)
• To provide infrastructure, such as, power, roads, water and health, necessary for the development of the economy.
• To increase the range of instrument available to the  public for investment purposes
• To support the growth of the domestic bond market in order to promote economic growth
• To enable the Federal Government effectively support the growth of the financial markets as part of the requirements for achieving its goals.

The following are the benefits of the bonds to the investor:

• Relatively high and stable returns
• Investment is free from default  risk
• Tax-free income
• Qualities as collateral for borrowing
• Tradable either over-the-counter (OTC) or on the floors of the Nigerian Stock Exchange (NSE).
• Qualities as liquid asset for banks

Who is eligible to invest?

• Households: Individuals and families both foreign and residents.
• Small businesses: Traders, Merchants, Professional Practices, etc
• Associations and unions: chamber of commerce, professional bodies, dtudent union,etc
• Educational institutions
• Corporate Entities: Banks, insurance companies, pension funds, etc
• Government: government agencies, state and local government.

How to buy bonds:  Bonds can be bought directly from the primary dealers appointed by the Debt Management Office (DMO). Also, bonds can be bought from the secondary market, through the primary dealer market  makers (PDMM) which comprises of the16 banks and 5 discount houses. The banks are:

• Access Bank Plc
• Afribank Nigeria Plc
• Bank PHB Plc
• Citibank Nigeria plc
• Diamond Bank plc
• Ecobank Nigeria plc
• Fidelity Bank Plc
• First Bank of Nigeria plc
• FCMB
• GTB
• Oceanic Bank Int’l Plc
• Stanbic IBTC Bank Plc
• Standard Chartered Bank Ltd
• Union Bank of Nigeria
• United Bank for Africa Plc
• Zenith Bank Plc

The  discount houses are:

• Associated Discount House Ltd
• Consolidated Discount Ltd
• Express Discount Ltd
• First Securities Discount Houses Ltd
• Kakawa Discount House Ltd

The tenor for investment could be 3,5,10 or 20 years. The minimum amount needed to buy bonds is N10,000.00 and N1,000.00 thereafter. Interest will paid every 6months in arrears until maturity date. This will be credited to the designated bank account of the bondholders.

I believe this is informative. Dare to invest and enjoy the benefit of investing.