A survey or poll conducted today can bring you the result that most Nigerians do not know what a commercial papers is. Most might not even know that it is a low-risk investment option they should consider. In this post, we’ll be guiding you on what is commercial paper in Nigeria and how to invest and make money in commercial paper in Nigeria.
What is Commercial Paper in Nigeria? How to Invest and Make Money in Commercial Paper in Nigeria
In the next section, we’ll be explaining what a commercial paper is. You need to understand its concept before we get into the details.
What is Commercial Paper in Nigeria?
Commercial paper is a document or pieces of documents handed over to members of the public by a company in place or lieu of loans and fundings. So, this is a situation where members of the public or people give loans to company in exchange of these papers. These papers are like shares or investments or loans as interests accrue to them.
It is a short-term business transaction which time range and period can be as low as 300 days. So, let’s say a company offers you a commercial paper in need of loans or some amount, and you deposit 5 million naira with them. It is expected that the base capital and profit would be paid to you in around 30 days.
It is a low-risk investment option. The company is already profitable, and possibly issued out the commercial paper to use your invested money for a short-term business and project. Once the project is done with this short-term frame, you are paid.
Let’s take a look at the characteristics of this commercial paper.
Characteristics of Commercial Paper in Nigeria
1. High Credit Ratings
It is only companies who have high credit ratings that can offer commercial papers. Through this method, it is a highly industry and investment option. This makes it low-risk.
2. Short Maturity and Time Range
A commercial paper of a company matures in a short while of about 300 days. It is not even up to a year, and you are reaping the profits with your base capital back intact with you.
3. Low Risk
Obviously, commercial papers are low-risk investment options.
4. Low Interest Rate
Due to how short the time is, and the type of investment it is, commercial papers are low-interest rates investment options. You don’t earn much with it. You can earn around 4% to 8% profit of your invested money after the 300 days. Not high, but certainly not a bad investment option considering the low-risk nature of the business.
Commercial papers are backed by collateral. Thus, you have no fear of losing your investment.
6. SEC not Needed
SEC is not needed in this investment option because it is very secure. It is backed by collateral, and there is low risk.
Then, let’s take a look on how to buy commercial papers in Nigeria.
How to Buy Commercial Papers in Nigeria
There are options and places you can buy commercial papers in Nigeria. Let’s take a look at some of these options and steps.
1. Commercial and Investment Banks
You can get these papers through the investment, assets, and financial wings of your banks. You head to them to make inquiries about obtaining commerical papers, and which papers are available. They’ll be the experts to guide you.
2. Financial Advisors and Brokers
These people can also guide you and help you get the profitable commercial papers that you need. They may charge high for their services, but from the trusted ones, you can get good bargain of worthy and valuable commercial papers.
3. Buying Directly from the Companies
You can also consider the option of buying directly from the companies. If you know the right people, and have the right pieces of information, buying directly from the company is also a great move. Of course, with the right documentation and vetting process.
This is what is commercial paper in Nigeria and how to invest and make money in commercial paper in Nigeria. Commercial papers are low-risk investment options that you should consider trying out.