Answering the most Frequently Asked Questions about SACCOs
1. How do I make money in a SACCO?
You make money in two ways:
a) Dividends from share capital
b) Rebates on savings
1. How do I make money in a SACCO?
You make money in two ways:
a) Dividends from share capital
b) Rebates on savings
a) For you to be a member of a SACCO, you have to buy shares of the SACCO.
Every SACCO has a minimum share capital requirement that every member has to meet.
For example SACCO XYZ has a minimum share capital requirement of KES 20,000 (That's 100 shares worth KES 200 each)
Every SACCO has a minimum share capital requirement that every member has to meet.
For example SACCO XYZ has a minimum share capital requirement of KES 20,000 (That's 100 shares worth KES 200 each)
From your share capital, you get to make money via dividends.
Every financial year, SACCOs pay out dividends.
Let's say SACCO XYZ declares a dividend of 15% on share capital and you have KES 100K in share capital,
You make 15K before tax (5% tax is charged)
Every financial year, SACCOs pay out dividends.
Let's say SACCO XYZ declares a dividend of 15% on share capital and you have KES 100K in share capital,
You make 15K before tax (5% tax is charged)
b) From your savings or deposits in a SACCO, you earn interest known as rebates.
The savings earning this interest are savings in your BOSA account, not FOSA Account.
The interest on deposits is on a pro rata basis.
The savings earning this interest are savings in your BOSA account, not FOSA Account.
The interest on deposits is on a pro rata basis.
2/ Should I focus more on share capital or on my savings in a SACCO.
For most SACCOs, the dividend return is usually higher than the rebates or interest on savings.
For SACCO XYZ, the return on dividends might be 15% while rebates on deposits might be 10%
For most SACCOs, the dividend return is usually higher than the rebates or interest on savings.
For SACCO XYZ, the return on dividends might be 15% while rebates on deposits might be 10%
However, do note that Share capital is non withdrawable and non refundable.
You can only get your share capital back when exiting the SACCO, and you have to find a willing buyer.
On the other hand your savings determine the loan amount you can get.
You can only get your share capital back when exiting the SACCO, and you have to find a willing buyer.
On the other hand your savings determine the loan amount you can get.
Do note that for most SACCOs, savings in the BOSA account are non withdrawable.
You can only withdraw your saving when leaving the SACCO
And the SACCO has 30 days to refund you your money.
You can only withdraw your saving when leaving the SACCO
And the SACCO has 30 days to refund you your money.
3/ Why are SACCO loans better than bank loans?
a) They have lower interest rates. SACCOs lend at an average of 12% p.a. compared to banks which are way higher
b) The interest on SACCO loans isn't affected by changes in the Central Bank Lending rate.
a) They have lower interest rates. SACCOs lend at an average of 12% p.a. compared to banks which are way higher
b) The interest on SACCO loans isn't affected by changes in the Central Bank Lending rate.
When rates go up, interest on your loan isn't affected like that of banks since SACCOs are regulated by SASRA not the CBK
C) SACCO loans are on a reducing balance basis
The interest paid on the loan reduces over time since it is calculated on the principal that is outstanding.
C) SACCO loans are on a reducing balance basis
The interest paid on the loan reduces over time since it is calculated on the principal that is outstanding.
4/ Which is the best SACCO to join
The best SACCO to join is where you can easily get guarantors.
Join a SACCO where your work colleagues, friends, or relatives are members so that you can easily get guarantors when in need of a loan.
The best SACCO to join is where you can easily get guarantors.
Join a SACCO where your work colleagues, friends, or relatives are members so that you can easily get guarantors when in need of a loan.
5/ If I don't intent to use a SACCO for credit facilities, are there other benefits of joining a SACCO
For SACCOs, the biggest opportunity is the access to *friendly terms* when getting a loan.
You can invest elsewhere to match the returns offered by deposits & share capital.
For SACCOs, the biggest opportunity is the access to *friendly terms* when getting a loan.
You can invest elsewhere to match the returns offered by deposits & share capital.
The access to better credit terms and for diversification makes SACCOs a no brainer for me.
But if that offer isn't appealing to you more so, if you think you'll never borrow money from the Sacco you'll always feel cheated
But if that offer isn't appealing to you more so, if you think you'll never borrow money from the Sacco you'll always feel cheated
6/ Do I need guarantors to get a loan from the SACCO
There are different options available depending on your SACCO
a) Self guarantorship from your savings. Your savings should be higher than your loan amount.
b) Guarantors.
c) Collateral
There are different options available depending on your SACCO
a) Self guarantorship from your savings. Your savings should be higher than your loan amount.
b) Guarantors.
c) Collateral
If you would like to learn more about SACCOs, Bonds, Money Market Funds
This e-book has detailed guides that will help you understand everything about them.
gichukikahome.com
This e-book has detailed guides that will help you understand everything about them.
gichukikahome.com
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