Frequently Asked Questions on Bonds
How do I invest in FGN bondsInvestments can be made through any of the 15 appointed primary dealers, one of which is Guaranty Trust Bank Plc. For further enquiries please call 4618717-9, where our dedicated bonds sales team would attend to you.
What is the minimum amount I can invest?A minimum value of N10,000.00 and multiples of N1,000 thereafter can be invested .Investments of a minimum value of N1,000,000.00 is however encouraged by the bank.
How safe is my investment in FGN bonds? Investments in FGN bonds are classified as risk free .This is because the issues are based on the full faith of the Federal Government of Nigeria,and is charged upon the general assets of Nigeria.
When do I get my interest payments? Interests are paid semi annually ,and amount received would depend on the coupon of the issue.
What is the yield or returns on investment in the FGN bonds? Please click on bond database to see a trend of the yield at previous auctions.
Can I terminate my investment prematurely? Yes investments in bonds can be terminated prematurely through a secondary market sale,this might however be at a profit or loss to the investor depending on the current market yield.
Why Bother with Bonds? Bonds are appropriate any time you cannot tolerate the short-term volatility of the stock market, and where there is a need for stable, predictable and safe returns. Take these two examples where this may be true:
1) Retirement - The easiest example to think of is an individual living off a fixed income. A retiree simply cannot afford to lose his/her principal as income for it is required to pay the bills.
2) Shorter time horizons - Say a young executive is planning to go abroad for an MBA in three years. It's true that the stock market provides the opportunity for higher growth, which is why his/her retirement fund is mostly in stocks, but the executive cannot afford to take the chance of losing the money going towards his/her education. Because money is needed for a specific purpose in the relatively near future, fixed-income securities are likely the best investment.
This is especially true with the FGN bonds where the returns are safe and secure because the issues are based on the full faith of the Federal Government of Nigeria, and charged upon the general assets of Nigeria.
