Government securities are a popular investment option for those looking for a safe and reliable way to grow their money.
Government securities are debt instruments issued by a government to finance its spending needs.
In simple terms, when a government needs to raise money for projects like building infrastructure, paying off debts, or funding public services, it borrows money from the public by issuing securities.
In return, the government promises to pay back the borrowed amount with interest over a specified period.
There are two main types of government securities:
Trading in government securities in Kenya is a straightforward process, and it can be done through various channels such as banks, brokers, or directly through the Central Bank of Kenya (CBK). Here’s how you can get started:
3. Purchase securities: If your bid is successful, you will purchase the securities by paying the amount you bid. For T-Bills, you’ll pay less than the face value (since they’re sold at a discount), and for T-Bonds, you’ll pay either face value or a price determined at the auction.
4. Receive interest payments: If you invest in T-Bonds, you’ll receive periodic interest payments until the bond matures. T-Bills, on the other hand, don’t pay periodic interest; instead, you make a profit when the government pays you the face value of the bill at maturity.
5. Sell your securities (Optional): You don’t have to hold your securities until they mature. If you need cash or want to realise your profit early, you can sell your T-Bills or T-Bonds in the secondary market through your bank or broker.
Profit from government securities comes in two forms:
Investing in government securities is considered a low-risk option because the government guarantees the repayment of your investment.
It’s a great way to earn a steady income or grow your savings while contributing to the country’s development.
