Treasury Bills (T-Bills) are widely considered one of the safest investment options in Nigeria due to their zero-risk nature and government backing. However, no investment is perfect, and T-Bills come with certain disadvantages that investors need to be aware of.
If you’re considering investing in Treasury Bills, this guide will cover:
✅ The major drawbacks of Treasury Bills in Nigeria
✅ Why T-Bills may not always be the best investment choice
✅ How to overcome these challenges
💡 Want to calculate your Treasury Bills returns before investing? Use our free Treasury Bills Calculator to estimate your earnings instantly!
1️⃣ Low Returns Compared to Other Investments
One of the biggest drawbacks of Treasury Bills is that they offer lower returns compared to other investment options such as:
✔ Fixed deposits
✔ Mutual funds
✔ Bonds and stocks
✔ Real estate
Example:
If you invest ₦1,000,000 in Treasury Bills at a 10% return, your profit at the end of the year will be ₦100,000.
However, the same ₦1,000,000 invested in a well-performing stock portfolio could yield 30% or more, earning you ₦300,000+.
💡 Solution: Consider diversifying your portfolio with higher-return investments like bonds, mutual funds, or real estate.
2️⃣ High Minimum Investment in the Primary Market
If you want to buy T-Bills directly from the Central Bank of Nigeria (CBN) in the primary market, the minimum investment amount is ₦50 million.
This makes it inaccessible for most small and medium investors.
✔ Solution: You can still invest in Treasury Bills through the secondary market, where banks and brokers allow investments as low as ₦1,000 – ₦100,000.
📌 Want to estimate your T-Bill earnings? Use our Treasury Bills Calculator to calculate returns based on different investment amounts.
3️⃣ Interest Rates Can Fluctuate
Treasury Bill rates are not fixed and change based on market conditions.
✔ When demand for T-Bills is high, rates drop (meaning lower returns for investors).
✔ When demand is low, rates increase (meaning better returns).
Example:
In 2022, T-Bill rates were around 6-8%, but in 2024, rates increased to 20-30% due to economic policies and inflation.
💡 Solution: Monitor CBN auction results and invest when rates are high. Use our Treasury Bills Calculator to check potential earnings before investing.
4️⃣ Inflation Can Reduce Real Returns
If inflation is higher than your Treasury Bill return, your purchasing power actually decreases despite earning interest.
✔ Example:
If inflation is at 20% and your T-Bill return is 10%, your real return is negative (-10%), meaning your money is losing value over time.
💡 Solution: Diversify into inflation-protected assets such as real estate, stocks, or commodities.
5️⃣ No Regular Interest Payments
Unlike fixed deposits and bonds, which pay interest periodically, Treasury Bills do not provide regular income.
✔ Instead, T-Bills are sold at a discount and paid in full at maturity.
Example:
- You invest ₦1,000,000 in a 364-day T-Bill at 10%.
- You pay ₦900,000 upfront and receive ₦1,000,000 at maturity.
- You don’t receive monthly or quarterly interest payments.
💡 Solution: If you need regular income, consider investing in bonds or fixed deposits instead of Treasury Bills.
6️⃣ Limited Liquidity – Harder to Sell Before Maturity
✔ Treasury Bills are not as liquid as stocks or savings accounts.
✔ If you need cash before maturity, you must sell in the secondary market – which may not always be easy.
Example:
If you invest ₦1,000,000 in a 364-day T-Bill but need your money after 3 months, you will have to sell it in the secondary market. Finding a buyer may take time and could mean selling at a discount.
💡 Solution: Only invest in Treasury Bills if you can afford to lock your money for the full duration.
📌 Need help deciding the best investment amount? Use our Treasury Bills Calculator for instant calculations.
7️⃣ Withholding Tax on Secondary Market Sales
✔ In the primary market, Treasury Bill earnings are tax-free.
✔ However, if you buy T-Bills in the secondary market and sell before maturity, you may be subject to withholding tax (WHT) on your profit.
💡 Solution: If possible, hold T-Bills until maturity to avoid unnecessary tax deductions.
8️⃣ No Compounding of Interest
✔ Treasury Bills do not allow for compounding.
✔ Unlike a fixed deposit that reinvests earned interest, T-Bills give you a lump sum at maturity.
💡 Solution: If you want compounding benefits, reinvest your earnings in new T-Bills or other high-yield investments.
Is Treasury Bills the Right Investment for You?
Treasury Bills are a great investment if you want:
✅ 100% risk-free returns backed by the government
✅ Tax-free earnings (if held until maturity)
✅ Short-term investment options (91, 182, or 364 days)
However, T-Bills may not be the best option if you want:
❌ Higher returns – Consider stocks, mutual funds, or bonds instead.
❌ Regular interest payments – T-Bills only pay at maturity.
❌ Easy liquidity – If you may need your money before maturity, T-Bills might not be the best choice.
📌 Before investing, check the latest rates and calculate your expected earnings using our Treasury Bills Calculator.
Final Thoughts – Are Treasury Bills Worth It?
✅ Yes! Treasury Bills remain one of the safest and most reliable investment options in Nigeria.
📌 However, they have some disadvantages, including low returns compared to other investments, limited liquidity, and vulnerability to inflation.
💡 To make the best decision, always compare Treasury Bills with other investment options. Use our Treasury Bills Calculator to see if it’s right for you!