Are you thinking about simple ways of saving and investing during these hard economic times? Well, investing in government securities is a great way guaranteeing financial security and stability.
Even though this kind of investment is largely being done by commercial banks, corporate entities and pension schemes, individuals can also leverage on this for prospects.
According to the Central Bank of Kenya (CBK), government securities are dived into Treasury Bonds and Treasury Bills (T-Bills).
Treasury bonds are medium- to long-term investments, and their maturity can range from one year to 30 years. There are many different types of Treasury bonds, but their basic operations are similar.
If you buy bonds, it means you would be lending the government money for a specified period of time, which is the bond’s maturity.Â
According to CBK, investors receive interest payments every six months throughout that period, and upon maturity, they receive the face value amount that they invested.
Bonds Investment Threshold
Purchasing a Treasury bond requires one to have a minimum of Ksh50,000, this is according to the industry regulator.
On the other hand, Treasury bills are a short-term investment, with maturities of 91 days, 182 days and 364 days. This means that if you invest money in a Treasury bill, you will receive that money back within three months, six months or one year, depending on the bill you choose.
An investor makes money on Treasury bills because they are sold at a discount. If you invest in a 91-day Treasury bill, you will pay less than the bill’s face value, but after 91 days you will receive the full face value.
T-Bills Investment Threshold
Investing in T-Bills  requires one have a minimum of Ksh100,000.
How To Apply For Govt Securities
If you’re interested in investing in government securities you must have a bank account with a commercial bank in Kenya, and you must open a Central Depository System (CDS) account with CBK. Kenyans and foreign investors who meet these qualifications are free to invest in government securities directly with the regulator.
Those who do not wish to open a CDS account with the regulator can still invest by opening a client account with their commercial bank to invest on their behalf.Â
Opening CDS account is free with CBK but commercial banks typically have fees associated with client accounts.
Kenyans living abroad can invest in government securities as long as they have an active Kenyan bank account.Â
CDS enables one to buy and sell shares at the Nairobi Securities Exchange (NSE). You must have a CDS Account to buy and sell shares and other securities at the NSE. Functions of a CDS account are similar to your savings account, where your cash savings are stored.
Source: kENYANS.CO.KE
