How to use FGN Savings Bond to plan school, marriage expenses others

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FGN Savings Bond

How to use FGN Savings Bond to plan school, marriage expenses others

Federal Government of Nigeria (FGN) Savings Bond for the month of February 2020 opened on Monday. You should buy if you have some cash left in your deposits account.

FGN Bond goes for N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50,000,000.

In other word, you can investment as low as N5,000.

It cost money to save money is another way of telling you that inflation will reduce purchasing power cash stash in deposits.

Banks love foolish people. My friend saved N1 million in his deposits account, though it attracted average return of 3%. The thing is, yields are low across market. Now, banks are giving as low 5% on term deposits.

FGN savings bond is alternative to 3%, at least you can earn extra basis points. Many people don’t know about savings bond. It is not advisable to use it for long term investment.

Why should I buy the bond? Quite a number of people would like to know.

The thing is, some Nigerians live their lives at random. We pray to God to do the thing we can do.

Savings is the last thing on the agenda of many people. It is understandable, monthly take-home hardly and rarely takes anybody home.

But then, you have to do what you have to do – you must save for the future expenses –planned and unplanned.

It is not easy for quite a number of people to set aside part of their incomes for future use.

Even with understanding that school fees of the kids have to be paid, it has always been fire brigade approach to solving issues.

Meanwhile there are financial products that can attend to things like this. FGN Savings bond could actually be the answer to planning future expenses.

Many times, it is not lack of discipline, but the fact that average family incomes almost equal their monthly expenses.

You have to be decisive on this. Kids must go to school. You don’t need to access loan for your marriage ceremony etc.

You can save toward your holiday plan and many more future projects that would gulp cash.

GTI Securities in a note said the purpose of the bond is to deepen the national savings culture and provide opportunity to all citizens irrespective of income level to contribute to National Development.

According to GTI Securities, the bond enable all citizens participate in and benefit from the favorable returns available in the capital market as government seeks to diversify funding sources.

What is in there for you?

You will get interest income quarterly directly into bond holder’s account. Again, the Bond is acceptable as collateral for loans by banks and can be sold for cash in the secondary market before maturity.

Then, this is a good toward savings for retirement, marriage, school fees, house projects, etc. because it secured.

Speaking about security, the saving bond is backed by the full faith and credit of the Federal Government of Nigeria.

You can easily convert the document to cash. The Bond will be listed on the Nigeria Stock Exchange for trading and provides liquidity for investors who want to exit before maturity.

How to subscribe

Investors are to subscribe through stockbroking firms trading on the floor of The Nigerian Stock Exchange (NSE) and accredited by the DMO to act as Distribution Agents.

You can check the list by visiting www.dmo.gov.ng for the list of accredited Stockbroking Firms.

How to use FGN Savings Bond to plan school, marriage expenses others by Ogochi Ndubuisi