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FIXED DEPOSIT TERMS
Rank: Elder Joined: 6/27/2008 Posts: 4,114
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mwekez@ji wrote:DtheK wrote:@mwekez@ji here you go examplePlease 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? SACCOS members buy shares through monthly savings. A SACCO is NOT a savings account! It is a membership purchase. Therefore, SACCOs do not normally pay interest on "savings". they pay DIVIDENDS for shares owned. The dividend rates hover around 5% pa..... loans are at 12% pa..... usually promoted as 1% pm... 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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Rank: Member Joined: 2/20/2008 Posts: 84
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mwekez@ji wrote: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 @mwekez@ji Tufanye hesabu, FYI: My bank charges 4% differential (i.e. btn Interest rate on loan and FDR) So, Term Loan of e.g. Kes 1M for 3 yrs at 14% rate. This amount amortized gives repayment of Kes 34,177 for 36 months and total interest of Kes 230,395. Collateral used is Kes 1M FDR earning an interest of 10%. Every year, net interest earned is Kes 85,000. For the 3 yrs duration total interest earned Kes 255,000. (This actually may be higher as the FDR is renewed on annual basis hence the principal on the subsequent year includes the previous year's interest element) Life and beer are very similar........chill for best results.
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Rank: Member Joined: 9/21/2006 Posts: 422 Location: Nairobi
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mukiha wrote:
SACCOS members buy shares through monthly savings. A SACCO is NOT a savings account! It is a membership purchase.
Therefore, SACCOs do not normally pay interest on "savings". they pay DIVIDENDS for shares owned. The dividend rates hover around 5% pa..... loans are at 12% pa..... usually promoted as 1% pm...
A point of corections. Those who join saccos like myself utilize the initial monthly cpntributions to buy the minimum number of shares prescribed in the by-laws of such saccos. The value of these shares are as per prescribed in the said by-laws are likely to be between kshs 1,000 to 20,000 per member. Hence they are shareholders. Thereafter, all other contributions go towards savings (Popularly known as deposits). At the end of the year, saccos pay Dividens on the shares held and also pay interest on the savings (deposits) held. Hence you will always see sacco declaring something like 12% on shares and 9% on deposits ....... and I have never seen a sacco pay dividend rates at around 5%....... that too los, unless you point out one such sacco to us.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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mukiha wrote:mwekez@ji wrote:DtheK wrote:@mwekez@ji here you go examplePlease 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? SACCOS members buy shares through monthly savings. A SACCO is NOT a savings account! It is a membership purchase. Therefore, SACCOs do not normally pay interest on "savings". they pay DIVIDENDS for shares owned. The dividend rates hover around 5% pa..... loans are at 12% pa..... usually promoted as 1% pm... Clarification: SACCOs actually mainly pay interest as most of the members' cash is in the deposit (withdrawable) category. The rest is in shares(non-withdrawable and minimal) and this is what earns dividends! I hope it's clear. The opposite of courage is not cowardice, it's conformity.
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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iMANI wrote:mwekez@ji wrote: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 @mwekez@ji Tufanye hesabu, FYI: My bank charges 4% differential (i.e. btn Interest rate on loan and FDR) So, Term Loan of e.g. Kes 1M for 3 yrs at 14% rate. This amount amortized gives repayment of Kes 34,177 for 36 months and total interest of Kes 230,395. Collateral used is Kes 1M FDR earning an interest of 10%. Every year, net interest earned is Kes 85,000. For the 3 yrs duration total interest earned Kes 255,000. (This actually may be higher as the FDR is renewed on annual basis hence the principal on the subsequent year includes the previous year's interest element) @iMANI Tufanye hesabu that has no payment terms mismatch. A Term Loan of KES 1M repayable in lumpsum at the end of one year will attract interest of KES 149,342 while the Term Deposit will pay a net interest of KES 85,000 only. That means you are loosing a whopping KES 64,342 in such loan arrangement. Note: The bank will never loose money in any lending arrangement but you, you do
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Rank: Member Joined: 2/20/2008 Posts: 84
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@mwekez@ji Most term loans are repayable in monthly instalments, hence, I do not understand where you get the Kes 149,342? Anyway, true MOST banks will never loose money in a lending arrangement, but if you're keen enough, you will actually pull this one off...I'm speaking from a real scenario as previously described where the loan is on reducing balance and FDR is on simple interest.. Life and beer are very similar........chill for best results.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Layman wrote:mukiha wrote:
SACCOS members buy shares through monthly savings. A SACCO is NOT a savings account! It is a membership purchase.
Therefore, SACCOs do not normally pay interest on "savings". they pay DIVIDENDS for shares owned. The dividend rates hover around 5% pa..... loans are at 12% pa..... usually promoted as 1% pm...
A point of corections. Those who join saccos like myself utilize the initial monthly cpntributions to buy the minimum number of shares prescribed in the by-laws of such saccos. The value of these shares are as per prescribed in the said by-laws are likely to be between kshs 1,000 to 20,000 per member. Hence they are shareholders. Thereafter, all other contributions go towards savings (Popularly known as deposits). At the end of the year, saccos pay Dividens on the shares held and also pay interest on the savings (deposits) held. Hence you will always see sacco declaring something like 12% on shares and 9% on deposits ....... and I have never seen a sacco pay dividend rates at around 5%....... that too los, unless you point out one such sacco to us. I sit COLLECTED. Thanks 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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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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iMANI wrote:@mwekez@ji
Most term loans are repayable in monthly instalments, hence, I do not understand where you get the Kes 149,342?
Anyway, true MOST banks will never loose money in a lending arrangement, but if you're keen enough, you will actually pull this one off...I'm speaking from a real scenario as previously described where the loan is on reducing balance and FDR is on simple interest.. My example above seems complex for you so i choose to use your example where your profit in the loan arrangement is KES 24,605 after 36 months. If in your example you used your KES 1M therefore avoiding the borrowing and then opened a recurring deposit account where you deposit the KES 34,177 p.m., for 36 months, at an interest rate of 10% p.a., compounded annually, you would make a profit of KES 199,600 after the 36 months unlike the meager KES 24,605 in the loan arrangement. You may use this Recurring Deposit Calculator to confirm the hesabu >>> https://www.corpbanknet.com/Recurr_deposit_Calc.html. That takes me back to the question, why take a loan that is 100% secured by cash. Its just like giving the bank your money at a low interest rate then borrowing it at a high interest rate. Your monthly loan repayments gives the bank more money for onward lending making the bank richer. .... why not make yourself richer by atleast using the cash then opening a recurring deposit account as explained above
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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mwekez@ji wrote:iMANI wrote:@mwekez@ji
Most term loans are repayable in monthly instalments, hence, I do not understand where you get the Kes 149,342?
Anyway, true MOST banks will never loose money in a lending arrangement, but if you're keen enough, you will actually pull this one off...I'm speaking from a real scenario as previously described where the loan is on reducing balance and FDR is on simple interest.. My example above seems complex for you so i choose to use your example where your profit in the loan arrangement is KES 24,605 after 36 months. If in your example you used your KES 1M therefore avoiding the borrowing and then opened a recurring deposit account where you deposit the KES 34,177 p.m., for 36 months, at an interest rate of 10% p.a., compounded annually, you would make a profit of KES 199,600 after the 36 months unlike the meager KES 24,605 in the loan arrangement. You may use this Recurring Deposit Calculator to confirm the hesabu >>> https://www.corpbanknet.com/Recurr_deposit_Calc.html. That takes me back to the question, why take a loan that is 100% secured by cash. Its just like giving the bank your money at a low interest rate then borrowing it at a high interest rate. Your monthly loan repayments gives the bank more money for onward lending making the bank richer. .... why not make yourself richer by atleast using the cash then opening a recurring deposit account as explained above Which bank offers the recurring deposit facility in Kenya?  Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Impunity wrote:mwekez@ji wrote:iMANI wrote:@mwekez@ji
Most term loans are repayable in monthly instalments, hence, I do not understand where you get the Kes 149,342?
Anyway, true MOST banks will never loose money in a lending arrangement, but if you're keen enough, you will actually pull this one off...I'm speaking from a real scenario as previously described where the loan is on reducing balance and FDR is on simple interest.. My example above seems complex for you so i choose to use your example where your profit in the loan arrangement is KES 24,605 after 36 months. If in your example you used your KES 1M therefore avoiding the borrowing and then opened a recurring deposit account where you deposit the KES 34,177 p.m., for 36 months, at an interest rate of 10% p.a., compounded annually, you would make a profit of KES 199,600 after the 36 months unlike the meager KES 24,605 in the loan arrangement. You may use this Recurring Deposit Calculator to confirm the hesabu >>> https://www.corpbanknet.com/Recurr_deposit_Calc.html. That takes me back to the question, why take a loan that is 100% secured by cash. Its just like giving the bank your money at a low interest rate then borrowing it at a high interest rate. Your monthly loan repayments gives the bank more money for onward lending making the bank richer. .... why not make yourself richer by atleast using the cash then opening a recurring deposit account as explained above Which bank offers the recurring deposit facility in Kenya? My Bank >>> http://www.imbank.com/accounts/recurring-deposits/
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Rank: Member Joined: 1/24/2013 Posts: 325
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MatataMingi wrote:I have fixed deposit accounts at several banks - all for one year.
There is no automatic renewal.
Before the end of the term YOU decide if you want to renew, and hassle for the best new rate of interest. If you agree it is renewed at the new rate. If not you get your capital plus interest and can shop around for a better rate.
At the moment, out of the "safe" banks I think I&M give a good rate.
Otherwise go for T bills or Bonds. So right now if I have a loose milli, should I do T-Bills or an FDA? Which bank? I have in the past only dealt with Consolidated for both..
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Rank: Elder Joined: 4/30/2008 Posts: 6,029
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ChumsQuest wrote:MatataMingi wrote:I have fixed deposit accounts at several banks - all for one year.
There is no automatic renewal.
Before the end of the term YOU decide if you want to renew, and hassle for the best new rate of interest. If you agree it is renewed at the new rate. If not you get your capital plus interest and can shop around for a better rate.
At the moment, out of the "safe" banks I think I&M give a good rate.
Otherwise go for T bills or Bonds. So right now if I have a loose milli, should I do T-Bills or an FDA? Which bank? I have in the past only dealt with Consolidated for both.. Look at the thread on Faulu vs TBILLS.
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Rank: Member Joined: 11/17/2009 Posts: 398 Location: Where everyone knows you
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ChumsQuest wrote:MatataMingi wrote:I have fixed deposit accounts at several banks - all for one year.
There is no automatic renewal.
Before the end of the term YOU decide if you want to renew, and hassle for the best new rate of interest. If you agree it is renewed at the new rate. If not you get your capital plus interest and can shop around for a better rate.
At the moment, out of the "safe" banks I think I&M give a good rate.
Otherwise go for T bills or Bonds. So right now if I have a loose milli, should I do T-Bills or an FDA? Which bank? I have in the past only dealt with Consolidated for both.. Depending on your timescale, I would suggest T-Bill of 91, 182 or 364 days.
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Rank: Veteran Joined: 11/17/2012 Posts: 1,461 Location: Ngong Forest
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Impunity wrote:Ngong wrote:And the USD rates quite good,are we heading to hundred?  If a certain coalition wins then USD rate will hit 150 by June 2013; dump and wait for rate to come down. @lmpunity did the coalition win?
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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Ngong wrote:Impunity wrote:Ngong wrote:And the USD rates quite good,are we heading to hundred? If a certain coalition wins then USD rate will hit 150 by June 2013; dump and wait for rate to come down. @lmpunity did the coalition win? June 2013 bado fika. Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Member Joined: 10/29/2009 Posts: 40
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before you put your money in a fixed deposit account, consider a money market fund with a unit trust, they usually have better rates and more flexibility
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Rank: Veteran Joined: 11/17/2012 Posts: 1,461 Location: Ngong Forest
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Impunity wrote:Ngong wrote:Impunity wrote:Ngong wrote:And the USD rates quite good,are we heading to hundred? If a certain coalition wins then USD rate will hit 150 by June 2013; dump and wait for rate to come down. @lmpunity did the coalition win? June 2013 bado fika. Okay noted,wil wait.
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Rank: Veteran Joined: 11/17/2012 Posts: 1,461 Location: Ngong Forest
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mwekez@ji wrote:Impunity wrote:mwekez@ji wrote:iMANI wrote:@mwekez@ji
Most term loans are repayable in monthly instalments, hence, I do not understand where you get the Kes 149,342?
Anyway, true MOST banks will never loose money in a lending arrangement, but if you're keen enough, you will actually pull this one off...I'm speaking from a real scenario as previously described where the loan is on reducing balance and FDR is on simple interest.. My example above seems complex for you so i choose to use your example where your profit in the loan arrangement is KES 24,605 after 36 months. If in your example you used your KES 1M therefore avoiding the borrowing and then opened a recurring deposit account where you deposit the KES 34,177 p.m., for 36 months, at an interest rate of 10% p.a., compounded annually, you would make a profit of KES 199,600 after the 36 months unlike the meager KES 24,605 in the loan arrangement. You may use this Recurring Deposit Calculator to confirm the hesabu >>> https://www.corpbanknet.com/Recurr_deposit_Calc.html. That takes me back to the question, why take a loan that is 100% secured by cash. Its just like giving the bank your money at a low interest rate then borrowing it at a high interest rate. Your monthly loan repayments gives the bank more money for onward lending making the bank richer. .... why not make yourself richer by atleast using the cash then opening a recurring deposit account as explained above Which bank offers the recurring deposit facility in Kenya? My Bank >>> http://www.imbank.com/accounts/recurring-deposits/ @Mwekezaji saidia,what is recurring deposit in simple terms please?
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Rank: Veteran Joined: 12/23/2010 Posts: 1,229
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Ngong wrote:mwekez@ji wrote:Impunity wrote:mwekez@ji wrote:iMANI wrote:@mwekez@ji
Most term loans are repayable in monthly instalments, hence, I do not understand where you get the Kes 149,342?
Anyway, true MOST banks will never loose money in a lending arrangement, but if you're keen enough, you will actually pull this one off...I'm speaking from a real scenario as previously described where the loan is on reducing balance and FDR is on simple interest.. My example above seems complex for you so i choose to use your example where your profit in the loan arrangement is KES 24,605 after 36 months. If in your example you used your KES 1M therefore avoiding the borrowing and then opened a recurring deposit account where you deposit the KES 34,177 p.m., for 36 months, at an interest rate of 10% p.a., compounded annually, you would make a profit of KES 199,600 after the 36 months unlike the meager KES 24,605 in the loan arrangement. You may use this Recurring Deposit Calculator to confirm the hesabu >>> https://www.corpbanknet.com/Recurr_deposit_Calc.html. That takes me back to the question, why take a loan that is 100% secured by cash. Its just like giving the bank your money at a low interest rate then borrowing it at a high interest rate. Your monthly loan repayments gives the bank more money for onward lending making the bank richer. .... why not make yourself richer by atleast using the cash then opening a recurring deposit account as explained above Which bank offers the recurring deposit facility in Kenya? My Bank >>> http://www.imbank.com/accounts/recurring-deposits/ @Mwekezaji saidia,what is recurring deposit in simple terms please? Fancy way of saying that you save by effecting a standing order so that some amount is deducted from your regular account and credited to your savings account periodically.
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Rank: Veteran Joined: 12/23/2010 Posts: 1,229
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Oops. Just looked. Looks like its more than just saving through a standing order. The interest rate is fixed depending on saving period and is better than what you'd get from a regular savings account.
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