INVESTING 101: INVESTING IN GOVERNMENT BONDS FOR THE KENYAN YOUTH.
What are Government Bonds?
Government bonds are avenues that governments borrow from the general public to fund their projects. The Government through the Treasury asks for loans in the form of bonds from people (investors.)
Treasury Bonds are a secure medium to long-term investment. It offers interest payments every 6 months throughout the bond’s maturity.
Who can invest in Government Bonds?
Any person or organization with a Central Depository System (CDS) account with the Central Bank and a bank account can invest in Government Bonds.
Types of Government Bonds.
- Fixed coupon bonds: A fixed coupon bond has a level interest rate over its entire term. Simply put, the interest attached to the bond will not change over the life of the bond. In every 6 months, the interest will stay the same.
- Infrastructure bonds: Infrastructure bonds are borrowings used by the government for infrastructure projects. They attract a lot of market interest. Returns from this type of bond are exempted from tax.
How will investors get returns?
Investors receive interest payments every 6 months. At the end of the period of the stated time, they receive the face value of the amount invested.
How much do I need to invest?
One needs a minimum of KES 50000 to invest in Treasury bonds and a minimum of KES 100000 to invest in Treasury bills.
Kenyan youths are encouraged to partake in treasury bonds as an investment. The returns are guaranteed.
