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Rank: Veteran Joined: 6/8/2010 Posts: 1,729
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Na hii metropolitan sacco inaweza kweli Life is an endless adventure
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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Boris Boyka wrote:mawinder wrote:nakujua wrote:Boris Boyka wrote:Lets take two ppl who commit 22k for 5years tuone.
1. A. takes 900k loan from commercial bank @16% p.a for 5years paying 22k monthly. at end of 5yrs
Total paid = 1320
Total gained = 900
Diff = -420k
2. B saves 22k in a sacco for 1yr= 264k. He takes a loan of 792k (3times shares) @12% p.a for 48 months pays 21 k monthly na ile 1k as shares to sacco. At end of five years
Total paid = 1008
Total earned ( 792+264+48) = 1104
Diff = - 4
NB:
Add on Dvdndns yearly compounded for the sacco guy. Is there a way to factor in that year the person in the sacco takes to raise that amount, compared to the bank loan where the individual gets the same almost instantly. I think for a home improvement or a loan for personal use the sacco will do, but for a money generating project the one year might be too costly. Plus what happens to the shares, considering that saccos have unlimited shares for members - won't one have to sell them at a lower rate. His calculation is not practical as you still contribute to the Sacco shares even after taking the loan at the same rate and not 1k as he puts it.Take the share contributions and add to the loan repayment for the bank loan and see that banks are cheaper @nakujua as it was said up there in the first year or so months (short term) benefits are few but subsequently benefits come in full force. Now the two are at Year 6 with A having around 345k ( dvdnd @ 7.5% p.a compounded) he can access a loan of 1,035,000 @ 12% p.a compare to B now taking same 1,035,000 @ 18% p.a as confirmed avg loan rate hapo juu.If you take other saccos like mwalimu who have been giving over 10% dvdns over the years (higher than some stocks returns,insurance policies & most MMF's) you are better of putting you cash in the sacco and guarantee safety plus avg 8% returns annually. Make the calculations again with 10% returns in dvdnd and 18% for bank loan...ata kama utaongeza inflation and time value of money.....sacco guy is better mid to long term. Hope you read on when leaving a sacco what goes on...You don't have to sell @ premium unless uko na haraka saana.when you want to leave the sacco You apply and get all your deposits after like 60 days ,share capital ndio you transfer or retain which is like 5k only. @Mawinder am sorry to say you must be ignorant ! what do you mean by practical? I have taken loans in both , i have friends and colleagues who have taken in both cases, i have sat down with brochures and made calculations concerning loans thus am talking from practical point of view. Also that 1k was a good example. what was key that huoni is that the two MUST be commiting same amount so that calculating the benefits we say they put in (invested) same amount. You can even change so that he uses 19 k on loan and 3k as shares(loan amount reduces but money at sacco increases) so long as total = 22k I even talked of a plan of joining two saccos to enable you get a much bigger loan so that approval and guarantors won't be difficult! I say again take your time go do the maths...don't shy off ati sacco' ni za umaskini. NB By shares i mean total of share capital and deposits. but in the sacco threads utaona the differences Hapo sawa, lakini kwa calculation yako, shouldn't the 264 k initial amount that you accumulate in one year should be deducted from the gains, since you can not access that cash during the duration of the loan, same also goes for the 48k shares amount. Now factor in the cost of the 12 months (time) needed to accumulate the cash - the bank loan might turn out to be cheaper for some.
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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 @nakujua haven't i elaborated that  To know the total gains/possesions/balance we pose a question to the two at end of 5yrs that ehat do you have? Dont bother investment. A will say i have 900k from the loan only. B will say i have 792k from loan and 312k in sacco (264 in yr 1 & 48k in yrs 2-5) total 1104k. calculate the diff. Further A would have paid 420k to bank in interes B will have paid 216k to sacco in interest The diff A will have no dvdns accrued B will have dvdnds accrued about 35k the difff Now compute your 1yr time value na utuambie who's better. Rem also long term now at Yr 6 onwards B continues accruing dvdnds when A is crying in toilet. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: New-farer Joined: 11/24/2013 Posts: 14
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Sacco loans are superior to bank loans in many respects, particularly being that we as shareholders are involved in all aspects of decision making, including deciding the interest charged on loans & dividends paid, and being that most Saccos give loans from their cheap share deposits, the interest rates on loans are basically cast in stone. I'm yet to heard of a case where a Sacco has increased interest rates on loans in the middle of repayment as banks often do. In as far as guarantors go, I formed a clique of six level headed colleagues who would guarantee my loans at a drop of a hat as I would guarantee theirs. Lengthy turn around depends on the Sacco, mine takes just takes two days to have the cheque deposited in my account.
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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Boris Boyka wrote: @nakujua haven't i elaborated that To know the total gains/possesions/balance we pose a question to the two at end of 5yrs that ehat do you have? Dont bother investment. A will say i have 900k from the loan only. B will say i have 792k from loan and 312k in sacco (264 in yr 1 & 48k in yrs 2-5) total 1104k. calculate the diff. Further A would have paid 420k to bank in interes B will have paid 216k to sacco in interest The diff A will have no dvdns accrued B will have dvdnds accrued about 35k the difff Now compute your 1yr time value na utuambie who's better. Rem also long term now at Yr 6 onwards B continues accruing dvdnds when A is crying in toilet.  pole, I am those students who don't get any concept in class and ends up frustrating the teacher. My reasoning is financially crude, never paid much attention to those business classes - usikasirike sana. If you are strictly looking at figures at the end of the 5 years then the sacco is better, the best actually would be to save the 22k per month under the mattress for 5 years.
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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nakujua wrote:Boris Boyka wrote: @nakujua haven't i elaborated that To know the total gains/possesions/balance we pose a question to the two at end of 5yrs that ehat do you have? Dont bother investment. A will say i have 900k from the loan only. B will say i have 792k from loan and 312k in sacco (264 in yr 1 & 48k in yrs 2-5) total 1104k. calculate the diff. Further A would have paid 420k to bank in interes B will have paid 216k to sacco in interest The diff A will have no dvdns accrued B will have dvdnds accrued about 35k the difff Now compute your 1yr time value na utuambie who's better. Rem also long term now at Yr 6 onwards B continues accruing dvdnds when A is crying in toilet. pole, I am those students who don't get any concept in class and ends up frustrating the teacher. My reasoning is financially crude, never paid much attention to those business classes - usikasirike sana. If you are strictly looking at figures at the end of the 5 years then the sacco is better, the best actually would be to save the 22k per month under the mattress for 5 years.  sijakasirika...Matress bank ni  Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Veteran Joined: 11/19/2010 Posts: 1,308 Location: nairobi metropolitan
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You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. . If you get the right bank. .bank loan anytime Democracy does not belong to the dead
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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githundi wrote:You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime You read hurriedly! You comments shows gaps in understanding. Do you fear doing calculations? I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you talking of? Let me help you. Another scenario: They both invest the loan money earning 20% intrest annually compounded. A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a A 900k x (1.2)^5 = 2240k B 792k x (1.2)^4 = 1643k Cash in sacco A. = 0000 B. = 312k Dividends 8% p.a compounded A. = 000 B = 135k Interest paid to bank/sacco on loan A @ 18% p.a. = 471k B @ 12% p.a = 216k Networth at end of 5years. A (2240+0+0)- 471 = 1769 B (1643+312+135)- 216 = 1874. My friend which is higher? At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any. Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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Boris Boyka wrote:githundi wrote:You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime You read hurriedly! You comments shows gaps in understanding. Do you fear doing calculations? I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you talking of? Let me help you. Another scenario: They both invest the loan money earning 20% intrest annually compounded. A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a A 900k x (1.2)^5 = 2240k B 792k x (1.2)^4 = 1643k Cash in sacco A. = 0000 B. = 312k Dividends 8% p.a compounded A. = 000 B = 135k Interest paid to bank/sacco on loan A @ 18% p.a. = 471k B @ 12% p.a = 216k Networth at end of 5years. A (2240+0+0)- 471 = 1769 B (1643+312+135)- 216 = 1874. My friend which is higher? At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any. Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete. let me try out some biased maths the same. 20k monthly payment = min 60k monthly salary 12 x 60 = 720k per year (your min annual worth) 1874 - 1769 = 105k 720k > 105k But on a serious note, your example is too expensive when you factor in the one year time period.
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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githundi wrote:You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime I think both serve different purposes and categories of people - most employed guys would prefer a Sacco loan, while most guys especially those trying to grow their biasharas would prefer a good relationship with a bank.
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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nakujua wrote:Boris Boyka wrote:githundi wrote:You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime You read hurriedly! You comments shows gaps in understanding. Do you fear doing calculations? I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you talking of? Let me help you. Another scenario: They both invest the loan money earning 20% intrest annually compounded. A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a A 900k x (1.2)^5 = 2240k B 792k x (1.2)^4 = 1643k Cash in sacco A. = 0000 B. = 312k Dividends 8% p.a compounded A. = 000 B = 135k Interest paid to bank/sacco on loan A @ 18% p.a. = 471k B @ 12% p.a = 216k Networth at end of 5years. A (2240+0+0)- 471 = 1769 B (1643+312+135)- 216 = 1874. My friend which is higher? At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any. Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete. let me try out some biased maths the same. 20k monthly payment = min 60k monthly salary 12 x 60 = 720k per year (your min annual worth) 1874 - 1769 = 105k 720k > 105k But on a serious note, your example is too expensive when you factor in the one year time period. Your maths is ntialala like comrades...that annual worthness! Seems this student is hard headed and out to frustrate the teacher. That one year is factored in my maths above. You can see 900k for 5 years while 792k for 4 years?? In first year A makes more than B but as years progress the gap reduces and overturns.Just take a pen and paper and do it. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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Boris Boyka wrote:nakujua wrote:Boris Boyka wrote:githundi wrote:You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime You read hurriedly! You comments shows gaps in understanding. Do you fear doing calculations? I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you ltalking of? Let me help you. Another scenario: They both invest the loan money earning 20% intrest annually compounded. A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a A 900k x (1.2)^5 = 2240k B 792k x (1.2)^4 = 1643k Cash in sacco A. = 0000 B. = 312k Dividends 8% p.a compounded A. = 000 B = 135k Interest paid to bank/sacco on loan A @ 18% p.a. = 471k B @ 12% p.a = 216k Networth at end of 5years. A (2240+0+0)- 471 = 1769 B (1643+312+135)- 216 = 1874. My friend which is higher? At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any. Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete. let me try out some biased maths the same. 20k monthly payment = min 60k monthly salary 12 x 60 = 720k per year (your min annual worth) 1874 - 1769 = 105k 720k > 105k But on a serious note, your example is too expensive when you factor in the one year time period. Your maths is ntialala like comrades...that annual worthness! Seems this student is hard headed and out to frustrate the teacher. That one year is factored in my maths above. You can see 900k for 5 years while 792k for 4 years?? In first year A makes more than B but as years progress the gap reduces and overturns.Just take a pen and paper and do it. I think you guys need to meet or something and sort this math problems practically . One is east and the other is west . Kutananeni ,
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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Boris Boyka wrote: Your maths is ntialala like comrades...that annual worthness! Seems this student is hard headed and out to frustrate the teacher. That one year is factored in my maths above. You can see 900k for 5 years while 792k for 4 years?? In first year A makes more than B but as years progress the gap reduces and overturns.Just take a pen and paper and do it. , teachers have to be patient and understanding - that said some teachers tend to get biased in their teaching methods and focus on what is straight forward leaving aside the juicy parts. If one needs 900k in a loan, using your example when will the sacco individual get the 900k of disposable cash for use. now we need a way of calculating the cost of the time difference and of course the opportunity cost - we are assuming people take out loans for a particular need, otherwise if we are to look at your example then its better off stashing the 20k per month under a mattress for 5 years.
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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enyands wrote:Boris Boyka wrote:nakujua wrote:Boris Boyka wrote:githundi wrote:You guys are ignoring the issue of time, security of your money when you guarantee others..and the fact that you have to tie your money to get money. .
If you get the right bank. .bank loan anytime You read hurriedly! You comments shows gaps in understanding. Do you fear doing calculations? I said do the time factor and prove. Memory lapse...We talked of short term,mid term & long term which are you ltalking of? Let me help you. Another scenario: They both invest the loan money earning 20% intrest annually compounded. A invests the 900k for all 5 years,B invests the 792k for 4 years while the other sacco shares earn 8% p.a A 900k x (1.2)^5 = 2240k B 792k x (1.2)^4 = 1643k Cash in sacco A. = 0000 B. = 312k Dividends 8% p.a compounded A. = 000 B = 135k Interest paid to bank/sacco on loan A @ 18% p.a. = 471k B @ 12% p.a = 216k Networth at end of 5years. A (2240+0+0)- 471 = 1769 B (1643+312+135)- 216 = 1874. My friend which is higher? At year six onwards A won't have time advantage now....they will take same loan amount at same time.. While B enjoys dvdnd A won't have any. Guaranteeing is Mutual because you guarantee me i guarantee you. @Githundi Come back again with something concrete. let me try out some biased maths the same. 20k monthly payment = min 60k monthly salary 12 x 60 = 720k per year (your min annual worth) 1874 - 1769 = 105k 720k > 105k But on a serious note, your example is too expensive when you factor in the one year time period. Your maths is ntialala like comrades...that annual worthness! Seems this student is hard headed and out to frustrate the teacher. That one year is factored in my maths above. You can see 900k for 5 years while 792k for 4 years?? In first year A makes more than B but as years progress the gap reduces and overturns.Just take a pen and paper and do it. I think you guys need to meet or something and sort this math problems practically . One is east and the other is west . Kutananeni , sasa what is the need of a forum if we meet in person and iron out stuff, of course I throw in a daft observation, I balance my equation with foreign parameters, someone else notes that and puts across an alternative na kila mtu anapata manufa yake kivyake, hata kwa vizazi vijavyo. ama unaona aje
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Rank: Elder Joined: 3/18/2011 Posts: 12,069 Location: Kianjokoma
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The best way to compare the two is to hold all other factors constant i.e. assume you can take 1M loan from either of the two Then put them side by side SACCO will beat bank there
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Rank: Elder Joined: 2/22/2009 Posts: 2,449 Location: Africa
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I once guaranteed a friends loan in a sacco only for him to start defaulting. Wacha tu. When they started recovering his loan through me I almost went ballistic. That's the downside of Sacco borrowing. Luckily after much chasing he paid his loan
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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@nakujua B will have to contribute 22k for 14 months = 308k. He now qualifies for that 900k and invests it for 46 months(3.83 yrs). A invests all the 900k for 60 months (5yrs). Both at 20% profit p.a cmpnd.**When B qualifies for the loan ;Here A will be commiting 22,855/- on loan only while B Commits 23700 on loan and 2k on shares total 25700 mothly. If we ensure all put the 25700 into use for our study,then A will have a surplus of 2845/- for the remaining 46 months to invest and we assume it earns 8% p.a Calculations: Loans payments: A. 22,855 x 60 months = 1,371,300. B. 23,700 x 48 months = 1,137,600. Interest paid A. (1371-900)k = 471k B. (1137-900)k = 237k ROI on loan invested. A 900k x (1.2)^5 =2240k B 900k x (1.2)^3.83 = 1810k. Surplus/Money at Sacco without dvdnds. A.( 2845 x 46 ) = 130k B. 308+(2 x 46) = 400k The above with 8% dvdnd p.a compounded A. = 158k B. = 570k Net gains by both = Earnings - expenses (intrest on loan): A ( 2240+158) - 471 = 1927k B ( 1810+570) - 237 = 2143k. Make your own inferences. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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@Lolest they were clinging on the time factor and therefore i had to dissapprove them. Anyway for your case:Taking 1M Loan from: Bank @18% p.a for 48 Months repayment is Kshs. 29,375 total repayment is Kshs 1,410,000. Sacco @ 12% p.a for 48 months repayment is Kshs. 26,350 pm, total repayment is Kshs. 1,264,800. Bank @18 % p.a for 60 Months repayment is Kshs 25,400 pm, total repayment is Kshs. 1,524,000. Sacco @12% p.a for 60 months repayment is Kshs. 22,245 pm, total repayment is Kshs 1,334,700. Note also the diff in monthly payments which leave B with much surplus to invest as shares in sacco @ 8% p.a dvdnds. NB Factors affecting our study include: I) Time periods at which to evaluate the two. II) Loan amount taken. III) Amount committed monthly. IV) Interest rate on loan. V) Rates of Return on investment. among others. All of them can't be equal. When you hold one or more constant,the other will vary but results will be achieved. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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Boris Boyka wrote:@nakujua B will have to contribute 22k for 14 months = 308k. He now qualifies for that 900k and invests it for 46 months(3.83 yrs). A invests all the 900k for 60 months (5yrs). Both at 20% profit p.a cmpnd.**When B qualifies for the loan ;Here A will be commiting 22,855/- on loan only while B Commits 23700 on loan and 2k on shares total 25700 mothly. If we ensure all put the 25700 into use for our study,then A will have a surplus of 2845/- for the remaining 46 months to invest and we assume it earns 8% p.a
Calculations:
Loans payments:
A. 22,855 x 60 months = 1,371,300.
B. 23,700 x 48 months = 1,137,600.
Interest paid
A. (1371-900)k = 471k
B. (1137-900)k = 237k
ROI on loan invested.
A 900k x (1.2)^5 =2240k
B 900k x (1.2)^3.83 = 1810k.
Surplus/Money at Sacco without dvdnds.
A.( 2845 x 46 ) = 130k
B. 308+(2 x 46) = 400k
The above with 8% dvdnd p.a compounded
A. = 158k
B. = 570k
Net gains by both = Earnings - expenses (intrest on loan):
A ( 2240+158) - 471 = 1927k
B ( 1810+570) - 237 = 2143k.
Make your own inferences. you are complicating the calculation when you bring in investments. Lets focus on the cost of getting and paying the loan for now, since investments bring in more parameters. Loan amount 900k A gets in 0 months (60 months repayment) B gets in 13 months (47 months repayment) ___________________A: __________ B: monthly payment __ 22,854 ______ 24,175 total payment ____ 1,371,245 ___ 1,131,379 total interest ___ 471,245 _____ 231,379 At this point we consider the direct benefits at the end of 5 years; ____________ A: _____________ B: Surplus ____ 62,087 (diff) __ 300,000 (shares) Interest ___ -471,245 ________ -231,379 Time _______ 13 months ______ 0 months A = -409167 + (cost of 13 months) B = -231,379 + (cost of disposing of 300k shares) and that is my hesabu jua kali style
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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@nakujua you are good at confusing yourself. Time could be factored in if the value reflects in the money either gained or lost. That's why i showed the invested amounts. .. As you said you daft. Your jua kali is real as that of Mandera. I rest my case. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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