Treasury bills, often referred to as T-Bills, are debt securities issued by the government to raise funds for various projects and initiatives. For investors seeking a safe and low-risk avenue to grow their wealth, T-Bills are a compelling option, offering guaranteed returns and minimal volatility, making them ideal for conservative investors or those nearing retirement.
Features of T-Bills:
- T-Bill’s maturities range from 91 days to 1 year, providing flexibility for different investment horizons.
- You can buy T-Bills at a discount to their face value and earn the difference upon maturity.
- The Central Bank of Kenya (CBK) holds weekly auctions for T-Bills, ensuring easy accessibility.
- The minimum investment is Kes100,000
What benefits do you get when you invest in T-Bills?
- T-Bills offer near-zero default risk since they are backed by the government thereby offering peace of mind.
- Predictable interest income
- You can easily sell your T-Bills before maturity if needed.
- Interest earned on some T-Bills may be tax-exempt, boosting your returns.
Before investing in T-Bills, it is important to know that you only get the original invested amount upon maturity and if inflation rates exceed your T-Bill interest rates, your purchasing power may decrease.
To invest in T-Bills, you need to open a CDS account if you do not have one. You would then check the CBK website for auction dates, maturities, and interest rates. Once you identify one of interest, submit your bid electronically during the designated auction window.
It is important to know that all investments have an inherent risk attached to them and diversifying your investment portfolio helps you manage risk effectively. T-Bills are a valuable addition to your investment portfolio, offering security, stable returns, and a stepping stone toward your financial goals; however, before investing, consider your financial situation and seek professional advice if needed.