FEDERAL SAVINGS BOND: Getting Started and Why You Must Invest in it

The act of saving and investing money regularly will significantly provide much required financial support at a time of need and it is never too late to build your savings and investment.

FEDERAL SAVINGS BOND

What is Federal Savings Bond?

Federal savings bonds are debt securities issued by the Debt Management Office to help pay for Government's borrowing needs. The Federal savings bonds are considered one of the safest investments because they are backed by the full faith and credit of the Federal Government.

It is a bond issued by the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria. The bond is tailored and targeted at retail investors with guaranteed quarterly interest payment and repayment of the principal at maturity.

They are classified as a risk free debt instrument and therefore have no default risk, meaning that it is absolutely certain your interest and principal will be paid as and when due. The interests income earned from the securities are tax exempt.

In other words, they are retail investment instrument introduced by the Federal Government of Nigeria to promote the savings culture in Nigeria while giving retail investors the opportunity to earn income from a secure investment. The FGN Savings Bond is issued by the Debt Management Office.

The Federal Government Savings Bonds have almost all the features of the existing Federal Government Bonds, but majorly targeted at retail investors who by reason of the amount of money involved may not be able to participate in the monthly bond auction of the Federal Government of Nigeria.

They provide an avenue for more Nigerians to participate in the capital market through an instrument accessible to all income groups.

They also guarantee quarterly interest payments and repayment of the principal at maturity.

Features Of The Federal Savings Bonds

1. The offer opens every first week of every month for 5days; Monday to Friday.

2. The minimum amount you can subscribe is N5,000.

3. Interest is fixed at every offer.

4. Tenor is between 2 & 3years.

5. Interest are paid to investors every 3months and the principal will be paid at maturity.

6. Your holding will be credited into your CSCS Account.

7. The bond will be listed and tradable on The Nigerian Stock Exchange.

8. The Bond is backed by the full faith and credit of the Federal Government of Nigeria.

 

Benefits Of The Federal Savings Bonds

1. It is a means of diversifying your investment portfolio.

2. Interest is tax- free.

3. Interest can be reinvested.

4.Steady source of income.

5.The investment can be used as collateral for loan.

6. It preserves your capital.

7. It offers better returns than savings account.

8. The bond can be sold in the secondary market whenever investors need cash.

To participate in the Federal Savings Bond, you have to open a CSCS through a Broker. though this is necessary, it is not a prerequisite.

To enable you invest in the Federal Savings Bond, you have to apply and complete the subscription form. This could be obtained from your broker or downloaded.

Payment is made through your chosen stockbroker. (At NO extra cost)

Your interest/maturity is paid directly into your provided bank account.

To confirm purchase or sale of FGN Savings Bond, investors are notified by CSCS most often by alerts through their phones

FGNSB holders can also transfer their bond to their children on the exchange through nominal transfer.

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