Most Nigerians don't know they can invest in government bonds as individuals. They also have the erroneous impression you need millions to invest in bonds. But that isn't the case.In fact, on behalf of the Federal Government of Nigeria, the Debt Management Office (DMO) offers the FGN savings bond, primarily targeting low income earners so they could earn additional money. It also encourages savings culture with better reward compared to savings in banks.
With as low as N5,000 you can also benefit. The bond tailored at retail investors includes a guaranteed interest payment and repayment of the principal.
Some of the benefits include; quarterly interests payable directly into your bank account; it is safe and is backed by the full faith and credit of the FG and Government Bonds hardly default. So you are nearly 100 percent sure that you will get your money back in full along with the interest.
According nairametrics.com, the "FGN Savings Bond is a good way to save towards your marriage, an occasion, school, project, retirement etc. You can also use the bond as a collateral to get a loan from a bank."
However, there are a few risks you need know about. nairametrics.com explains that "being a bond there are a few risks, should you decide to sell before maturity. Just like a stock, you can invest N1 million in a bond and get only N900 thousand in principal. You also face the risk of losing the value of your investment to inflation.
If the interest rate on the FGN Savings Bond is lower than inflation rate, then your returns are lower than in real terms. In a high inflationary environment like Nigeria, investing in bonds can lead to a loss of value if the rates are lower than inflation."
But by and large, investors say, investing in FGN bonds are a good buy as the yield are always very high.
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