Advisory column: Retirement - My Treasury bills must be worth more

I believe you are talking about Treasury bills, which are government debt instruments issued through the Bank of Jamaica. There are several challenges that would make it extremely difficult to determine the value of your Treasury bills.

Unlike other forms of interest-earning securities, Treasurys do not carry a stated interest rate. They trade on a discount basis and the return is the difference between the discounted value and the value at maturity. The yield, therefore, is calculated on the discounted value, which really is the cost to the investor.

It is interesting that you should mention that you bought your Treasury bills through a bank, as there is a belief that they can only be bought through the investment companies.

It would be reasonably straight forward to determine the value of your bills if each issue had the same rate of return. From the table below, showing the average yield of each issue of the six-month Treasury Bills issued in January of 2001 to 2011, it is clear that the yields varied widely over the period. There were also issues in July of those years. Please see the Bank of Jamaica website - www.boj.org.jm/announcements - for details of the results of Treasury bill tenders.

Average yields of six-month Treasury bill tenders, January 2001-2011:

2001 19.41%

2002 15.74%

2003 16.90%

2004 17.15%

2005 14.40%

2006 13.30%

2007 11.99%

2008 13.33%

2009 24.26%

2010 12.50%

2011 7.46%

The average annual yield after tax on the bills you bought is approximately 8.0 per cent or 10.7 per cent before tax. This latter figure looks a lot different from the comparable figures in the table (see insert). If you took time to get the average yields of the bills issued in July over the similar period, in addition to the January tenders, you could attempt to calculate the value of your investment but this tedious exercise would not give you a reliable result.

First of all, you would not be able to say the various rates that the bank tendered at for each issue of the bills; you do recognise that each rate could be at, below, or above the average Treasury bill yield. Further, banks do not work for free, so there would be a fee, which would increase the cost of the investment, or reduce the principal or income earned, thereby affecting the yield. Indeed, you would need to know the fees charged by the bank.

I cannot say if the bank would agree to provide you with information on the rate at which it invested your funds at each rollover and how much you earned. Why don't you ask? The bank, too, may give a different account from yours, so there is not much I can say from this distance.

You did not say if you ever requested information from the bank before 2011, if it ever sent statements, if you gave them written instructions about how to invest your money, when you became aware that they were disregarding your instructions, and what action you took then, if any.

It is important for individuals to follow up their business for the simple reason that it is their business. I hope you and the bank will be able to resolve this matter.