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FIXED DEPOSIT TERMS
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DtheK
#71 Posted : Friday, March 15, 2013 12:54:01 PM
Rank: Member

Joined: 2/15/2010
Posts: 167
Location: Kenya
thanks @mukiha the reason I wanted to find out is because I was thinking of a situation where one can borrow against his unit trust account,during the period that one is indebted the account's in the creditors name ukimaliza deni unarudishiwa.

Any reason this can't be done(legal)if there are any what are the options?
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mukiha
#72 Posted : Friday, March 15, 2013 1:13:55 PM
Rank: Elder

Joined: 6/27/2008
Posts: 4,114
DtheK wrote:
thanks @mukiha the reason I wanted to find out is because I was thinking of a situation where one can borrow against his unit trust account,during the period that one is indebted the account's in the creditors name ukimaliza deni unarudishiwa.

Any reason this can't be done(legal)if there are any what are the options?


Why borrow?

Why not use the funds in the Unit Trust for whatever you want to do?
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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mwekez@ji
#73 Posted : Friday, March 15, 2013 7:51:35 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
mukiha wrote:
DtheK wrote:
thanks @mukiha the reason I wanted to find out is because I was thinking of a situation where one can borrow against his unit trust account,during the period that one is indebted the account's in the creditors name ukimaliza deni unarudishiwa.

Any reason this can't be done(legal)if there are any what are the options?


Why borrow?

Why not use the funds in the Unit Trust for whatever you want to do?


@DtheK, i also ask, why take a loan secured by Fixed Deposit or Money Market Unit Trust? Why give these institutions your money for a low interest rate (low income to you) and yet borrow the same money at a crazy interest rate (high cost you'll pay for the loan)?
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DtheK
#74 Posted : Saturday, March 16, 2013 4:02:00 PM
Rank: Member

Joined: 2/15/2010
Posts: 167
Location: Kenya
the reason;
-When somebody can give you more than the much you have saved in your account.like saccos do when they give you 3x your savings.
This is better because interest is compounded and in most cases higher than offered by Saccos/banks.And you get the best rate regardless of amount saved(at least the same as everybody else in that trust)
-Or in the rare occurence that somebody can lend to you at a lower rate.

Now back to my original question can it be done?
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mwekez@ji
#75 Posted : Sunday, March 17, 2013 11:38:53 AM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
DtheK wrote:
the reason;
-When somebody can give you more than the much you have saved in your account.like saccos do when they give you 3x your savings.
This is better because interest is compounded and in most cases higher than offered by Saccos/banks.And you get the best rate regardless of amount saved(at least the same as everybody else in that trust)
-Or in the rare occurence that somebody can lend to you at a lower rate.

Now back to my original question can it be done?


@DtheK, in case of my bank, one get a loan with security being Fixed Deposit (FDR). One is charged an interest rate ranging between 3-6% above the FDR interest rate. This loan rate is usually lower than the normal loan rate. .... The downside with this is that one has to provide Fixed Deposit amounting to atleast the same amount of the loan, meaning one is essentially borrowing their money at a cost. Worse, the interest rate on FDR is calculated by simple interest method while interest rate on the loan is calculated by compound interest method. Fanya hiyo hesabu .... thats the reason i have never understood why one should take a loan secured by 100% cash .... Q to you, name an institutions (even a sacco) which will lend you 3 times your cash savings at your said lower/same interest rate as the cash deposit rate
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DtheK
#76 Posted : Sunday, March 17, 2013 3:55:03 PM
Rank: Member

Joined: 2/15/2010
Posts: 167
Location: Kenya
@mwekez@ji here you go example
Please note that 3x the amount saved in shares is the norm in saccos.
However selling them can be tricky.There is no market and you can only sell to existing members.
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mwekez@ji
#77 Posted : Sunday, March 17, 2013 4:23:57 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
DtheK wrote:
@mwekez@ji here you go example
Please note that 3x the amount saved in shares is the norm in saccos.
However selling them can be tricky.There is no market and you can only sell to existing members.


They lend 3x the amount saved at an interest rate of 12% p.a. I can almost bet that the interest rate given on the amounts saved is far less than the 12% p.a. .... Tell us, what is the interest rate paid on the amount saved?
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obiero
#78 Posted : Sunday, March 17, 2013 10:56:53 PM
Rank: Elder

Joined: 6/23/2009
Posts: 14,267
Location: nairobi
why do saccos suggest that one can borrow x3 their savings while it is ideally x2 considering that you are being lent some of your own money!
COOP, IMH, KQ, MTNU
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jerry
#79 Posted : Monday, March 18, 2013 12:01:22 AM
Rank: Elder

Joined: 9/29/2006
Posts: 2,570
obiero wrote:
why do saccos suggest that one can borrow x3 their savings while it is ideally x2 considering that you are being lent some of your own money!

Because you continue to earn interest(dvdd) on your savings.
The opposite of courage is not cowardice, it's conformity.
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mukiha
#80 Posted : Monday, March 18, 2013 9:11:35 AM
Rank: Elder

Joined: 6/27/2008
Posts: 4,114
DtheK wrote:
the reason;
-When somebody can give you more than the much you have saved in your account.like saccos do when they give you 3x your savings.
This is better because interest is compounded and in most cases higher than offered by Saccos/banks.And you get the best rate regardless of amount saved(at least the same as everybody else in that trust)
-Or in the rare occurence that somebody can lend to you at a lower rate.

Now back to my original question can it be done?


You didn't get my answer; It is NO.

You cannot transfer the account; but you can transfer the funds.

SACCOs give loans against deposits saved in the SACCO. If you want to enjoy the 3x borrowing scheme, you should transfer your FUNDS from the unit trust to the SACCO - many will accept lump sum transfers but a few will not.

In addition, many SACCOS will tell you to keep the savings with them for a certain minimum duration - typically between 3 and 6 months - before you can qualify to use it against a loan.

So; the answer to your original question is an emphatic NO;

In the same breath; you cannot transfer a bank account, you cannot transfer a [shares] CDSC account, and you cannot transfer a [T-bill & bond] CDS account.... only the contents of these accounts are transferable.

Now, may I ask, what type of unit trust do you have - money market or equity?
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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