Nigerian investors face an exciting dilemma in 2025: choosing between Treasury Bills, Fixed Deposits, and Mutual Funds for optimal returns. With higher interest rates across these investment options, understanding their differences has never been more crucial for wealth building.
Treasury Bills (T-Bills):
Short-term government debt securities issued by the Central Bank of Nigeria (CBN). Investors buy them at a discount and receive the full value at maturity—common tenors include 91, 182, or 364 days.
Fixed Deposits:
Bank savings products where you lock funds for a set period at fixed interest rates. Duration typically ranges from one month to several years.
Mutual Funds:
Investment vehicles that pool money from multiple investors into a diversified portfolio of securities, managed by professional fund managers.
| Feature | Treasury Bills | Fixed Deposits | Mutual Funds |
|---|---|---|---|
| Risk Level | Lowest (Government-backed) | Low (Bank-backed) | Low to Medium |
| Current Returns | 15–20% p.a. | 8–15% p.a. | 20–25% p.a. |
| Minimum Investment | ₦50,000 | ₦10,000–₦100,000 | ₦5,000–₦10,000 |
| Liquidity | High (secondary market) | Medium (penalties for early exit) | High (24–48 hours access) |
| Interest Payment | Upfront | At maturity | Monthly/Quarterly |
| Taxation | Tax-exempt | 10% withholding tax | 10% withholding tax |
Treasury Bills – Safest option, backed by the Nigerian government. Default risk is virtually non-existent.
Fixed Deposits – Depend on bank stability but insured by NDIC up to ₦500,000 per depositor per bank.
Mutual Funds – Carry some market risk, but diversification and professional management reduce exposure.
Mutual Funds: Money Market Mutual Funds are the top performers, offering 20–25% annually. Example: Legacy Money Market Fund generated ₦3,101 on ₦100,000 in just 45 days.
Treasury Bills: Now yield 15–20%, significantly higher than historic single-digit levels.
Fixed Deposits: Vary by bank but average 8–15% annually.
Treasury Bills: Easily tradable in the secondary market, with upfront interest payment for better cash flow.
Fixed Deposits: Early withdrawal attracts penalties, making them best for investors confident in their timelines.
Mutual Funds: Offer daily liquidity with withdrawals typically processed within 24–48 hours.
Treasury Bills: 100% tax-free returns (though banks may charge service fees).
Fixed Deposits & Mutual Funds: Subject to 10% withholding tax on interest earned.
Emergency Fund: Treasury Bills (safe, upfront returns).
Short-term Goals (1–2 years): Money Market Mutual Funds (high returns + liquidity).
Medium-term Goals (2–5 years): Fixed Deposits (predictable growth, compounding).
Diversification: Combine all three to balance stability, growth, and flexibility.
30% Treasury Bills – Stability & safety
40% Money Market Mutual Funds – Growth & liquidity
30% Fixed Deposits – Predictability
Which offers the highest returns?
Money Market Mutual Funds (20–25%), followed by Treasury Bills (15–20%).
What’s the minimum investment?
Mutual Funds: ₦5,000, Treasury Bills: ₦50,000, Fixed Deposits: ₦10,000–₦100,000.
How quickly can I access my money?
Mutual Funds: 24–48 hours
Treasury Bills: Secondary market exit
Fixed Deposits: Early withdrawal penalties apply
Your choice depends on risk tolerance, investment timeline, and expected returns:
Risk-averse investors: Choose Treasury Bills.
Growth-focused investors: Lean towards Mutual Funds.
Those seeking predictability: Use Fixed Deposits.
💡 Pro Tip: Don’t rely on one investment type. Diversify using a mix of all three.
Start comparing options today on nairaCompare’s investment platform to find the best rates and terms. With professional guidance and the right diversification, you can maximize returns while keeping risks under control.