8 Benefits of Investing in Treasury Bills in Kenya

I have had several people ask me whether investing in T-bills is the best use of their money. Now, I have to be honest here. If you are going to invest only the minimum amount (KSh 100,000), you’ll probably not see a lot of returns. 

However, there are several important benefits of investing in Treasury Bills in Kenya. ¹ For instance, if you are risk-averse and prefer security and capital preservation over high returns, this will be a great investment for you. 

In this guide, we discuss some of the advantages of investing in Treasury bills to help you understand whether it’s the right investing for you. 

Benefits of Investing in Treasury Bills in Kenya

1. Safe and Secure

Treasury bills are issued and backed by the government of Kenya. This means that they are safe investments with negligible risks. 

As the issuer, the government provides a full guarantee for both the principal amount and interest payments. This assurance makes Treasury bills an attractive choice if you are risk-averse and looking for a secure place to park your funds.

2. Predictable Returns

Unlike other investments like stocks and money market funds, you know exactly how much you are getting when you invest in T-bills. 

Why?

Because treasury bills offer fixed interest rates. These rates are determined through competitive auctions, providing investors with a clear and predictable return on their investment. As we discussed in our guide to investing in treasury bills, you make money by earning interest on top of your principal amount. 

For example, if you want to invest KSh 500,000, you pay say KSh 490,000 (This depends on the interest rate and duration of maturity) but the government will give you your 500k when the T-bills mature. This means that you make KSh 10,000 profit. 

As you can see, you know exactly how much you are going to make. But why is this important?

Well, knowing the exact interest rate upfront allows you to plan your finances with confidence.

3. Diversification

In most cases (especially when you choose a short maturity period), T-bills don’t pay much. However, they are great for diversifying your portfolio. As I always say, your portfolio should strike a good balance between secure and high-return investments. 

Throwing T-bills into your investment basket will give you peace of mind. Their low-risk nature and stable returns can help balance the overall risk profile of your investment portfolio. 

Therefore, if you want to reduce the overall volatility and potential losses in your portfolio. Make sure to include treasury bills alongside riskier assets like stocks or real estate.

4. Accessible

There are few restrictions to investing in treasury bills in Kenya. They are accessible to both individual and institutional investors. On top of that, they don’t require significant investments. 

The minimum amount you can invest in treasury bills in Kenya is KSh 100,000 which is fair for most people (At least if you compare it to other investments like real estate). 

This kind of accessibility helps to democratize access to secure government-backed investments, fostering financial inclusion and allowing more people to build wealth. 

5. Short-Term Investment

Treasury bills are available in various tenures, including 91 days, 182 days, and 364 days. This flexibility allows investors to tailor their investment horizon to their financial goals. 

For instance, if you have short-term financial needs or prefer to keep your funds accessible, you can invest in Treasury bills with shorter maturities (such as 91 days). This means that within three months, you get your money back. However, shorter maturities often have lower returns. 

So, if you want a slightly higher return and can commit your funds for a longer period, you should choose longer-term Treasury bills (like 364 days). 

6. Competitive Returns

As I have already mentioned, you will not get much returns from T-bills especially if you only invest the minimum amount with short a maturity period. 

However, when you compare to other low-risk, short-term investment options such as savings accounts or fixed deposits, you’ll find that treasury bills in Kenya actually offer competitive interest rates. 

And so, while the rates may vary with market conditions and government monetary policy, they generally remain competitive and predictable. If you have a good investment strategy, this can help grow your wealth at a steady pace while preserving capital.

7. No Fees

Investing in Treasury bills typically involves minimal transaction costs. Unlike some investment vehicles such as forex or stocks that may incur brokerage fees or commissions, the costs associated with buying Treasury bills are relatively low. 

This means that a larger portion of your invested funds is working for you, contributing to your overall returns.

8. Easy to Invest

Investing in Treasury bills is straightforward and convenient. You can invest through various channels, including banks, mobile apps, and online platforms. This accessibility allows you to manage your investments efficiently, monitor your holdings, and make informed decisions about your money. 

This ease of investment provides a hassle-free way to grow your wealth securely.

The Bottom Line 

As you can see, there are several benefits to investing in treasury bills in Kenya. They are safe, predictable, convenient, shorter term, and with no fees. 

However, note that while Treasury bills offer numerous benefits, they are not without limitations. For instance, they have relatively lower return potential compared to riskier investments like stocks and Forex. Therefore, before you invest, ensure that you understand your financial objectives, risk tolerance, and investment. 

Generally, I recommend diversifying your investment portfolio to include a mix of asset classes that can help you achieve a balanced and well-rounded financial strategy.

1. Central Bank of Kenya, Treasury Bills