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5k per month
3Piece
#1 Posted : Wednesday, November 11, 2009 7:49:00 AM
Rank: Member


Joined: 6/27/2008
Posts: 35
Hi SKerian

I got two long/medium term investments that demand a 5k contribution each month:

-Britak life policy scheme that will end in 13 years. I will start receiving the benefit after 8 yrs. The total amounting to about KSh.1.3 million. Borrowing will be at between 7-9% interest.

-Investment club of about 20 pips. Following all legal papers being signed,in six months,we plan to buy and develop land. We obviously sell when it appreciates in value. Borrowing will be at between 17-20% interest.

My dilemma is that I'm in more control of my finances with the investment club rather than the life policy of which i can only realistically get my returns after 8yrs. Which one would you advice me to pick? Have you heard of the Britak policy? Do they keep their word? What should I consider when joining the investment club (I think 20 pips is a large number and the interest rate on borrowing is quite high)?

retirement at 40.
Mainat
#2 Posted : Wednesday, November 11, 2009 8:04:00 AM
Rank: Veteran


Joined: 11/21/2006
Posts: 1,590
Don't understand. Are you taking a loan to finance these investments? I personally won't borrow to invest unless it was either short-term share deal or a long-time mortgage in Kenya (unless the cost of building was much higher). And I definitely won't borrow money within an investment club set-up. Who will carry the repayments if members abscond or there is fraud?


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Sehemu ndio nyumba
3Piece
#3 Posted : Wednesday, November 11, 2009 8:13:00 AM
Rank: Member


Joined: 6/27/2008
Posts: 35
Thanks Mainat
I am using my own cash for the monthly contributions. The borrowing that I am referring to is when I decide to take a loan from the same,the repayment will be at the interest rates that I have indicated above.

retirement at 40.
Fair_Car_Dealer
#4 Posted : Wednesday, November 11, 2009 8:49:00 AM
Rank: Member


Joined: 10/13/2009
Posts: 25
Location: Nairobi
It is not a matter of selecting between the 2 options. It is a question of setting your goals and funding them:

1. Britak Life Policy: Purpose is to leave your loved ones with some cash (Ksh. 1.3M) should you die. The end result is that they are able to fend for themselves from the proceeds of the policy. THIS IS NOT AN INVESTMENT (in the traditional sense). It is like having an emergency fund to tap onto should there be an emergency.

2. Investment Club: This is an investment where you (hopefully) reap some reward if your plans go according to your plan. This should be funded with excess cash (that is after you have funded your retirement,housing (rent/mortgage),insurance payments,other obligations,etc ).

As you can see,Number 1 and 2 above are very different. You need to decide which goal you are trying to achieve.

- Fair_Car_Dealer
PS: When buying land,consider an option of financing through the commercial banks. They will lend anywhere from 80% to 100% of the cost of the land at 15% per annum (contact Equity,Housing Finance,Savings & Loan,Consolidated Bank,etc for more details). This means your club can afford to pay the monthly payment (20 people x 5k per person=Ksh. 100,000) for 5 years to buy a plot worth Ksh. 4.2M. At the end you can all sell for a handsome profit or proceed to build as planned. The dynamics of whether your club members will actually faithfully pay 5k per person per month for 5 years is the subject of a whole different discussion.

~~~ Assisting Car Buyers Identify,Locate and Import the Car of their Choice from Japan,England or Singapore,at a Fair and Reasonable Price ~~~
Kamaa
#5 Posted : Wednesday, November 11, 2009 9:01:00 AM
Rank: Veteran


Joined: 10/6/2007
Posts: 1,177
Location: Nairobi - Kenya
@ 3piece

pls elaborate more on the britak policy...

@ fair car..

how are you arriving at @ 4.2M?

i thought 20*5k*12*6=6M...?


When you run so fast to get somewhere,you miss the fun of getting there... Life is not a race,so take it slowly....
When you hear what I say, you will not understand. When you see what I do, you will not comprehend
Fair_Car_Dealer
#6 Posted : Wednesday, November 11, 2009 9:10:00 AM
Rank: Member


Joined: 10/13/2009
Posts: 25
Location: Nairobi
@ Kamaa

Using a financial calculator,if you borrow 4.2M (principal) and repay 100k per month for 5 years at 15% per year,the total repayments will have been Ksh. 5.85M. The total interest is Ksh. 1.65M.

~~~ Assisting Car Buyers Identify,Locate and Import the Car of their Choice from Japan,England or Singapore,at a Fair and Reasonable Price ~~~
3Piece
#7 Posted : Wednesday, November 11, 2009 1:17:00 PM
Rank: Member


Joined: 6/27/2008
Posts: 35
@all: the britak policy is not real life policy per say since after 13 yrs u get back a total of 1.3mill. however,after 8yrs u are entitled to around 130k and so forth for each yr until the 13th. u may decide to forfeit this and wait for the lumpsum. therefore it may be regarded as more of an investment or a better than normal unit trust with guaranteed returns of 20% p.a. i havent read the policy,which is only issued after u have paid the initial premium,but u can back out in the 1st month if u dont like the policy. u may even reduce the 5k payment after the 1st yr if things become tough.

otherwise,thanks for ur advice.

retirement at 40.
Kamaa
#8 Posted : Thursday, November 12, 2009 8:54:00 AM
Rank: Veteran


Joined: 10/6/2007
Posts: 1,177
Location: Nairobi - Kenya
@ fair...

you lost me on the calculations....

i wonder which type of a calculator you are using...

even a simple one would not give you those figures....

When you run so fast to get somewhere,you miss the fun of getting there... Life is not a race,so take it slowly....
When you hear what I say, you will not understand. When you see what I do, you will not comprehend
Waria
#9 Posted : Thursday, November 12, 2009 9:05:00 AM
Rank: Member


Joined: 10/11/2007
Posts: 213
@ 3piece..20% guranteed returns!!!..please read the fine print or search this site for britak/oldmutual before you sign anything

Me first,U next
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