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Faulu Kenya now beats T-Bills for fixed deposits
Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Ngong wrote:jerry wrote:chiaroscuro wrote:Assuming the Faulu 12% is net, I give them 100k today and the give me 112k after one year. Here you say that I had to wait one year for my interest, true?
What if I give them Sh89,285.71 today; they'll give me 100k after one year [mathematicians invited to confirm the figures]. Now can you argue that I got the interest [Sh10,714.29] upfront?
Same bank, same account; only the amount deposited is changing. @All. When I was a teacher I could at times move with a few students when I thought the rest would take a centum! to understand concepts that I thought were easy. The point is we must "move on" and ask ourselves; what is it that is really paid upfront? Below is a quote from post #70; ......then 15% withholding tax on the discount is paid upfront? 11,087 x 15/100 = 1,663.05 Meaning s/he writes a cheque to CBK of 88,913 + 1,663.05 = 90,576.05 It is the Treasury that gets 15% tax upfront!!!! Hapana! wewe unalipa tax upfront na mara hiyo hiyo CBK wanakuandikia cheque ya interest/discount pap! kwa sababu hio ni bill yani discounted na wewe sio stupid!   anyone remembers the story about a cow (or donkey for Gachie / Naivasha pple), a river and drinking?? Pesa Nane plans to be shilingi when he grows up.
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Rank: New-farer Joined: 4/1/2013 Posts: 20
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Ladies and gentlemen, I beg to be allowed to put this matter to rest. I had thought the problem was one of semantics but i have since realized its not. My earlier post would appear to support the theory that T-bill holders earn their discount upfront. That was INCORRECT and indeed very embarrassing.
The principal amount on which CBK pays the interest, or discount if you may, is the net figure that the investor gives to CBK and not the full amount payable on maturity. E.g. for 100K, the amount being invested is the 90K, and CBK will calculate the interest on the 90K not 100K.
ION : I am supposed to log in to Wazua through g-mail but i have realized that option is not available on the log-in screen on my I-pad. Is there something am not doing right ? I can only log-in to wazua on the laptop. Any assistance will be highly appreciated.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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@Pesa Nane, come out clearly on punda na faras! ati CBK writes you a cheque. How can a borrower write you a cheque at the time of borrowing? @Banker, Can't agree with you more. Welcome! The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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jerry wrote:@Pesa Nane, come out clearly on punda na faras! ati CBK writes you a cheque. How can a borrower write you a cheque at the time of borrowing?
@Banker, Can't agree with you more. Welcome! @jerry that is misrepresentation. Nowhere I have mentioned any cheques (more so from CBK!) LINK? Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Banker wrote:Ladies and gentlemen, I beg to be allowed to put this matter to rest. I had thought the problem was one of semantics but i have since realized its not. My earlier post would appear to support the theory that T-bill holders earn their discount upfront. That was INCORRECT and indeed very embarrassing.
The principal amount on which CBK pays the interest, or discount if you may, is the net figure that the investor gives to CBK and not the full amount payable on maturity. E.g. for 100K, the amount being invested is the 90K, and CBK will calculate the interest on the 90K not 100K. @banker this last statement is the EMBARRASING one. Never does the CBK do any calculation (Discount, Interest, or otherwise) on the 90K. THE DISCOUNT RATE IS CALCULATED ON THE 100K as seen below.  Where, P = Price per Ksh 100 which investor will pay r = interest rate or yield per annum quoted by the investor d = days to maturity or tenor (91, 182 and later 364 days) Pesa Nane plans to be shilingi when he grows up.
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Rank: Member Joined: 8/29/2008 Posts: 571
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After going through the posts above,I've noted that a lot of people want to comment on T-Bills,but they don't invest in them.They don't seem to know exactly what goes on.Guys,buy Tbills first,then come to Wazua and argue your case with authority....instead of embarassing yourselves to the actual TBill investors.....
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Rank: Elder Joined: 4/22/2009 Posts: 2,863
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Ali Baba wrote:After going through the posts above,I've noted that a lot of people want to comment on T-Bills,but they don't invest in them.They don't seem to know exactly what goes on.Guys,buy Tbills first,then come to Wazua and argue your case with authority....instead of embarassing yourselves to the actual TBill investors..... Not exactly. Sometimes you can make the wrong assumptions for over 20 years. Even when reality is pointed out, some people still insist they are right. Take time and read the thread below where two Wazuans were arguing with the entire Wazua(Stockskenya) community about an issue which was so obvious to the two yet rocket science to the rest of the community, INCLUDING AN OLD MAN! http://wazua.co.ke/forum.aspx?g=posts&t=1109IF YOU EXPECT ME TO POST ANYTHING POSITIVE ABOUT ASENO, YOU MAY AS WELL SIT ON A PIN
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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Pesa Nane wrote:Banker wrote:Ladies and gentlemen, I beg to be allowed to put this matter to rest. I had thought the problem was one of semantics but i have since realized its not. My earlier post would appear to support the theory that T-bill holders earn their discount upfront. That was INCORRECT and indeed very embarrassing.
The principal amount on which CBK pays the interest, or discount if you may, is the net figure that the investor gives to CBK and not the full amount payable on maturity. E.g. for 100K, the amount being invested is the 90K, and CBK will calculate the interest on the 90K not 100K. @banker this last statement is the EMBARRASING one. Never does the CBK do any calculation (Discount, Interest, or otherwise) on the 90K. THE DISCOUNT RATE IS CALCULATED ON THE 100K as seen below. Where, P = Price per Ksh 100 which investor will pay r = interest rate or yield per annum quoted by the investor d = days to maturity or tenor (91, 182 and later 364 days) I wonder when @pesa Nane grow up?! Formulae or no formulae we've to see the reality that interest is earned on what you give not what you receive at end of term. The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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jerry wrote:Pesa Nane wrote:Banker wrote:Ladies and gentlemen, I beg to be allowed to put this matter to rest. I had thought the problem was one of semantics but i have since realized its not. My earlier post would appear to support the theory that T-bill holders earn their discount upfront. That was INCORRECT and indeed very embarrassing.
The principal amount on which CBK pays the interest, or discount if you may, is the net figure that the investor gives to CBK and not the full amount payable on maturity. E.g. for 100K, the amount being invested is the 90K, and CBK will calculate the interest on the 90K not 100K. @banker this last statement is the EMBARRASING one. Never does the CBK do any calculation (Discount, Interest, or otherwise) on the 90K. THE DISCOUNT RATE IS CALCULATED ON THE 100K as seen below. Where, P = Price per Ksh 100 which investor will pay r = interest rate or yield per annum quoted by the investor d = days to maturity or tenor (91, 182 and later 364 days) I wonder when @pesa Nane grow up?! Formulae or no formulae we've to see the reality that interest is earned on what you give not what you receive at end of term. Forget INTEREST !!!! Talk DISCOUNT !!Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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Jamaneni, Suppose Faulu gives 12% pa and CBK has 364 bill also pegged at 12%. Now suppose you have Zim$ 500,000 to invest for a period of 1 year (364 days). Faulu: 12% x 500,000 = 60,000 (Gross interest) Give Faulu 500,000 today and get 560,000 in a year’s time. CBK: 12% x 500,000 = 53,400 (Gross discount) Give 446,560 today to the fat lady seating at the far RH corner at CBK banking hall and get 500,000 in a year’s time. Therefore Invest 500,000 at 12% in Faulu and get an interest of 60,000 after 12 months. Invest 446,560 at 12% in CBK and get an interest of 53,440 after 12 months. Now the catch: Now if you invest 446,560 in Faulu today at 12% you will get an interest of 53,500. If you invest this CBK discount in Faulu fixed at 12%pa for a year you ger 12% x 53,440 = 6,400If you add 6,400+53,440 you get Approx 60,000 which is the same amount you get if you had invested upfront to Faulu. Jamaneni where is the interest paid upfront/kimbelele? Interest paid upfront is a fallacy!!!!!!! Case dismissed, petitioners and respondents to meet their own costs. Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Veteran Joined: 11/17/2012 Posts: 1,461 Location: Ngong Forest
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Watasema you were threatened by the security agencies.
CBK must be disbanded and reconstituted to reflect the wishes of some wazuans!
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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Can someone advise me how this upfront thing is done in other countries..is this version of upfront the colonial one..?
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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Chaka wrote:Can someone advise me how this upfront thing is done in other countries..is this version of upfront the colonial one..? Refer to my analysis in post #90 above; there is nothing like upfront interest.  Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 4/30/2008 Posts: 6,029
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Impunity wrote:Chaka wrote:Can someone advise me how this upfront thing is done in other countries..is this version of upfront the colonial one..? Refer to my analysis in post #90 above; there is nothing like upfront interest. Hakuna kitu kama upfront not unless in one's imagination.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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Pple are getting confused by the terminology "discount" It falsily! implies some favour by CBK. In layman's language DISCOUNT is simply the value addition in a time frame to a quantity. The time frame can be 91,182,364/5 days for T-bills. As I noted earlier only the tax may be upfront! if it goes to treasury pap" The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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jerry wrote:Pple are getting confused by the terminology "discount" It falsily! implies some favour by CBK. In layman's language DISCOUNT is simply the value addition in a time frame to a quantity. The time frame can be 91,182,364/5 days for T-bills. As I noted earlier only the tax may be upfront! if it goes to treasury pap" So its the treasury which benefits since they get the tax upfront! Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Impunity wrote:For Kes. 1,000,000 deposited for 12 months Fualu gives interest of Kes.102,000 (12%) CBK's 364-day T-Bill gives Kes. 95,395 in interest. A Bank fixed deposit is now beating CBK T-bills down, I haven't seen this for a very loooong time. How safe is this Faulu thing? Why are guys still oversubscribing T-Bills at the rate of over 300% when we have "free" money at Faulu Kenya?  Meanwhile, as the noise of Faulu Kenya's 12% continues, the weighted average T-Bill rates are 12.676 (1895), 12.674 (1894), 12.405 (1898), 12.504 (1897) beating Faulu hands down! Source CBKPesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Impunity wrote:For Kes. 1,000,000 deposited for 12 months Fualu gives interest of Kes.102,000 (12%) CBK's 364-day T-Bill gives Kes. 95,395 in interest. A Bank fixed deposit is now beating CBK T-bills down, I haven't seen this for a very loooong time. How safe is this Faulu thing?Why are guys still oversubscribing T-Bills at the rate of over 300% when we have "free" money at Faulu Kenya? Meanwhile, as the noise of Faulu Kenya's 12% continues, the weighted average T-Bill rates are 12.676 (1895), 12.674 (1894), 12.405 (1898), 12.504 (1897) beating Faulu hands down! Source CBKPesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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Pesa Nane wrote:Impunity wrote:For Kes. 1,000,000 deposited for 12 months Fualu gives interest of Kes.102,000 (12%) CBK's 364-day T-Bill gives Kes. 95,395 in interest. A Bank fixed deposit is now beating CBK T-bills down, I haven't seen this for a very loooong time. How safe is this Faulu thing?Why are guys still oversubscribing T-Bills at the rate of over 300% when we have "free" money at Faulu Kenya? Meanwhile, as the noise of Faulu Kenya's 12% continues, the weighted average T-Bill rates are 12.676 (1895), 12.674 (1894), 12.405 (1898), 12.504 (1897) beating Faulu hands down! Source CBK Please explain how the current Tbills beat Faulu hands down, please illustrate with figures as I did above. Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Impunity wrote:Please explain how the current Tbills beat Faulu hands down, please illustrate with figures as I did above. T-Bill 1895 the weighted price of Ksh.100 is 88.777 meaning a discount of Ksh. 11.223 per every 100 bob. Mr. Faulu = 1,000,000 Mr Tbill (1895) = 1,000,000 Investing options: Mr. Faulu: 1,000,000 at 12% in Faulu Mr. T-bill: 887,770 in T-bill and 112,230 at 12% in Faulu (Remember 112,230 is the upfront discount) After 1 Year: Mr. Faulu 1,000,000 + 12% interest = 1,120,000 Mr. Tbill 1,000,000 yield + (112,230 + 12% interest) = 1,125,697.60 Difference = 5,697.60 Pesa Nane plans to be shilingi when he grows up.
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