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A Beginner’s Guide to Understanding FGN Savings Bond

By September 13, 2022September 14th, 2022Education, Investment 101, Knowledge Series, Research, Uncategorized
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What is FGN Savings Bonds?

The Federal Government of Nigeria (FGN) Savings Bond is a retail investment instrument introduced by the Federal Government of Nigeria to promote saving culture among citizens, and also give them the opportunity to earn income from a secure investment.

When you invest in FGN Bonds, you are lending to the Federal government of Nigeria for a period of two or three years. That puts you in the position of a principal, and the government as a borrower. The borrower is obligated to pay interest to the principal until the initial loan amount is refunded at the end of maturity.

Why FGN Savings Bond?

The FGN savings Bonds is the safest of all investments because the risks are minimal and the principal is certain to receive their initial loan amount and agreed interest.

What do I gain from investing in the FGN savings Bond?

Quarterly interest which is paid directly into your bank account

Your initial your loan amount plus promised interest will be paid in full.

If you need to secure a loan from the bank, the bond can be used as collateral.

The FGN Savings bond can help save towards projects like wedding, vacation, tuition, etc.

The interest income earned from the securities is tax-exempt.

What is the maximum amount I can invest?

As a single retail investor, you cannot go beyond 50 million naira. Although, the bond starts at N5000. Also, you can only invest in multiples of N1000.

What if I want my money back before maturity date?

You can sell your bond and get cash. Again, since it’s not yet the maturity time for that bond, you might be required to pay a transaction fee.

Note: The bond is an instrument. In other words, it’s subject to the forces of demand and supply and inflation rates. Nigeria as we know it is fraught by inflation. This could affect the face value of the bond. Read more about this here.

How do I invest in the FGN Savings Bond?

You can buy it from a registered stockbroker like ARM Securities to be on the safe side. Learn more and get started here.

 

 

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