Why treasury bills are good investment instruments

Treasury bills are one of the safest forms of investment because they are backed by the Ghana Government and are considered risk-free.

You can purchase Government of Ghana’s 91 (3months)- and 182-day (6 months) Treasury bills with as little as Five Ghana Cedi from various banks in Ghana eg. Ecobank.

But the higher the number of days, the higher the interest rate and returns.

Treasury bills are risk-free and allow customers to either roll over both the principal and interest or continue with the investment (roll over the principal) and take your interest.

They can also be easily converted into cash.

There are also no applicable transactions costs i.e., transactions involving treasury bills are free.

T-Bills can be used as collateral to access loans from the Bank and there is no limit to how much one can buy. It depends on how much you are willing and able to buy.

Knowing the interest rate on an investment you want to buy, is almost always the first thing most people look out for before entering into any, be it treasury bills or bonds.

This is how to Calculate Interest Rate on a Treasury Bill according to pocketsense.com.

Treasury bills do not have a stated interest rate when you purchase them.

Instead, the T-Bills are sold at less than face value. When you’re paid the face value at maturity, the difference is your interest.

For example, you might spend GH¢978 to buy a T-Bill with a GH¢1,000 face value. When it matures, you receive your purchase price of GH¢978 plus GH¢22 of interest.

According to the bank of Ghana, as at February 28, 2022, 182 day-bill has an interest rate of 13.3085%, the 91 day-bill has 13.0269% and the 364 day-bill 16.9567%.

However, these rates are updated weekly on the Bank of Ghana’s website. This is to help investors make a decision on when to invest or otherwise.

You can either calculate it manually or use the automated Ghana Treasury bills calculator available online.