Structure of the Offer for Subscription.

The Federal Government Savings Bonds offered in 2017 are of two variants,

1. 2-Year FGN Savings Bond due October 18, 2019: 12.059% per annum

2. 3-Year FGN Savings Bond due October 18, 2020: 13.059% per annum

What a typical FGN Bond offering looks like.

For a passive investor, looking to generate income with minimal risks, subscribing to the FGN bond will generate a better return when compared to just leaving your money in your savings account which approximately yields 3–4% interest on capital per annum (Exact rate varies for different banks).

An investor looking to invest on fixed income securities, is better off doing a due diligence on available securities in the market, so as to select the one matching his/her need in terms of interest and tenure.

What does investing in the October 2017 federal savings bond mean to you as an investor? A scenario of how much one stands to get if a certain sum is invested is presented below;

Assuming an Investor subscribes up to a million Naira (1, 000, 000) worth of Federal Savings October bond,

  1. For the two (2) years tenured bond and interest rate of 12.059%, at the end end of every quarter, he/she will receive an interest payment of NGN 30,147.50 and this will continue throughout the lifespan of the bond. When the bond matures, then the principal is returned. At maturity of the Bond, the investor will have a net balance of NGN 1,241,180.00.
  2. For the three (3) years tenured bond with an annual interest rate of 13.059%, the investor will receive NGN 32,647.50 for each payment period which is at the end of every quarter throughout lifespan of the bond. At maturity, the investor will have a net balance of NGN 1,391,770.00.

As oppose to leaving your funds idle and earning paltry bank interest rates, the FGN savings bond is a good way to add value to your idle funds.

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