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Faulu Kenya now beats T-Bills for fixed deposits
Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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surely whats the argument here??lets just crunch the no.s and get the real value of both investments... possunt quia posse videntur
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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maka wrote:surely whats the argument here??lets just crunch the no.s and get the real value of both investments... http://www.centralbank.go.ke/index.php/calculatorpossunt quia posse videntur
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Rank: New-farer Joined: 4/1/2013 Posts: 20
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Are we really holding this discussion ? With a t-bill you earn your discount upfront less witholding tax and give CBK the net.
A bank FDR is always more liquid and less punitive than a t-bill. Should you require your money before the maturity of the tenor, you can always get it back from the bank and the worst is that you will forfeit the interest. But a 182-day t-bill would be a nightmare to liquidate.
A little secret. If you have a reasonable figure (>5mn),walk in to a newly opened branch of any top-tier bank and ask the manager to give you the best rate. You will be shocked how much backward he is willing to bend. If the figure is 100 million, you will just have secured yourself a lunch date with the CEO.
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Rank: Veteran Joined: 2/2/2012 Posts: 1,134 Location: Nairobi
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Banker wrote:Are we really holding this discussion ? With a t-bill you earn your discount upfront less witholding tax and give CBK the net.
A bank FDR is always more liquid and less punitive than a t-bill. Should you require your money before the maturity of the tenor, you can always get it back from the bank and the worst is that you will forfeit the interest. But a 182-day t-bill would be a nightmare to liquidate.
A little secret. If you have a reasonable figure (>5mn),walk in to a newly opened branch of any top-tier bank and ask the manager to give you the best rate. You will be shocked how much backward he is willing to bend. If the figure is 100 million, you will just have secured yourself a lunch date with the CEO. Aih mboss! Ati nini? I have just done a cheque for KSh90,576.05 which I will invest in one-year t-bill - issue 1897/364. This money will earn 12.504% interest and come 14 April 2014, I will get my KSh90,576.05 back plus KSh9,423.95 interest..... making a total of KSh100,000. Clearly, the interest will be paid AFTER maturity!!
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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chiaroscuro wrote:Banker wrote:Are we really holding this discussion ? With a t-bill you earn your discount upfront less witholding tax and give CBK the net.
A bank FDR is always more liquid and less punitive than a t-bill. Should you require your money before the maturity of the tenor, you can always get it back from the bank and the worst is that you will forfeit the interest. But a 182-day t-bill would be a nightmare to liquidate.
A little secret. If you have a reasonable figure (>5mn),walk in to a newly opened branch of any top-tier bank and ask the manager to give you the best rate. You will be shocked how much backward he is willing to bend. If the figure is 100 million, you will just have secured yourself a lunch date with the CEO. Aih mboss! Ati nini? I have just done a cheque for KSh90,576.05 which I will invest in one-year t-bill - issue 1897/364. This money will earn 12.504% interest and come 14 April 2014, I will get my KSh90,576.05 back plus KSh9,423.95 interest..... making a total of KSh100,000. Clearly, the interest will be paid AFTER maturity!! Aih Mboss! Interest is paid upfront!! You had KES 100,000/- to invest but CBK has taken KES 90,576.05 and left you with your interest of KES 9,423.95 (net of withholding tax). Now go invest that interest of KES 9,423.95 and watch yourself beating the Faulu FDR returns
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Rank: Veteran Joined: 12/23/2010 Posts: 1,229
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mwekez@ji wrote:chiaroscuro wrote:Banker wrote:Are we really holding this discussion ? With a t-bill you earn your discount upfront less witholding tax and give CBK the net.
A bank FDR is always more liquid and less punitive than a t-bill. Should you require your money before the maturity of the tenor, you can always get it back from the bank and the worst is that you will forfeit the interest. But a 182-day t-bill would be a nightmare to liquidate.
A little secret. If you have a reasonable figure (>5mn),walk in to a newly opened branch of any top-tier bank and ask the manager to give you the best rate. You will be shocked how much backward he is willing to bend. If the figure is 100 million, you will just have secured yourself a lunch date with the CEO. Aih mboss! Ati nini? I have just done a cheque for KSh90,576.05 which I will invest in one-year t-bill - issue 1897/364. This money will earn 12.504% interest and come 14 April 2014, I will get my KSh90,576.05 back plus KSh9,423.95 interest..... making a total of KSh100,000. Clearly, the interest will be paid AFTER maturity!! Aih Mboss! Interest is paid upfront!! You had KES 100,000/- to invest but CBK has taken KES 90,576.05 and left you with your interest of KES 9,423.95 (net of withholding tax). Now go invest that interest of KES 9,423.95 and watch yourself beating the Faulu FDR returns I prefer to do my mental maths like @mwekez@ji. Treat it as interest paid upfront, available for immediate re investment.
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Rank: Veteran Joined: 11/17/2012 Posts: 1,461 Location: Ngong Forest
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Haya kwa sisi wazee wangumbaru:
CBK Wants 100,000 from u @ 12.504%
After 12 months this adds to 100,000 + 12504[interest]=112,504
Withholding tax 15% of 12504=1875.60
Total profit = 12504 - 1875.60 =10628.40
In reality after 12 months you should get 100000+10628.40=110628.40
But you didnt give CBK 100K but 100K-10628.40[interest]=89371.60
So after one year they give you 100K and NOT 110628.40
Sasa jameni l give CBK 89371.60 NOW l get 100K AFTER 1 year where is the upfront interest payment tafathari?
Kwanini mambo ya pesa huwa always complicated?
Like why should CBK not just ask u to loan them 89371.60 @12.504% annually?
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Ngong wrote:Haya kwa sisi wazee wangumbaru:
CBK Wants 100,000 from u @ 12.504%
After 12 months this adds to 100,000 + 12504[interest]=112,504
Withholding tax 15% of 12504=1875.60
Total profit = 12504 - 1875.60 =10628.40
In reality after 12 months you should get 100000+10628.40=110628.40
But you didnt give CBK 100K but 100K-10628.40[interest]=89371.60
So after one year they give you 100K and NOT 110628.40
Sasa jameni l give CBK 89371.60 NOW l get 100K AFTER 1 year where is the upfront interest payment tafathari?
Kwanini mambo ya pesa huwa always complicated?
Like why should CBK not just ask u to loan them 89371.60 @12.504% annually?
The DISCOUNT is upfront since the VALUE at purchase is 100,000 but you just paid 89371.60 Please note the T-bill are in tranches of 100k Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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Pesa Nane wrote:Ngong wrote:Haya kwa sisi wazee wangumbaru:
CBK Wants 100,000 from u @ 12.504%
After 12 months this adds to 100,000 + 12504[interest]=112,504
Withholding tax 15% of 12504=1875.60
Total profit = 12504 - 1875.60 =10628.40
In reality after 12 months you should get 100000+10628.40=110628.40
But you didnt give CBK 100K but 100K-10628.40[interest]=89371.60
So after one year they give you 100K and NOT 110628.40
Sasa jameni l give CBK 89371.60 NOW l get 100K AFTER 1 year where is the upfront interest payment tafathari?
Kwanini mambo ya pesa huwa always complicated?
Like why should CBK not just ask u to loan them 89371.60 @12.504% annually?
The DISCOUNT is upfront since the VALUE at purchase is 100,000 but you just paid 89371.60 Please note the T-bill are in tranches of 100k Put it in anothet way. Interest is on 100k but you give them 89,371.60. This(upfront) is easy to see! When it comes to trading it's more dificult! The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 3/2/2009 Posts: 26,325 Location: Masada
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jerry wrote:Pesa Nane wrote:Ngong wrote:Haya kwa sisi wazee wangumbaru:
CBK Wants 100,000 from u @ 12.504%
After 12 months this adds to 100,000 + 12504[interest]=112,504
Withholding tax 15% of 12504=1875.60
Total profit = 12504 - 1875.60 =10628.40
In reality after 12 months you should get 100000+10628.40=110628.40
But you didnt give CBK 100K but 100K-10628.40[interest]=89371.60
So after one year they give you 100K and NOT 110628.40
Sasa jameni l give CBK 89371.60 NOW l get 100K AFTER 1 year where is the upfront interest payment tafathari?
Kwanini mambo ya pesa huwa always complicated?
Like why should CBK not just ask u to loan them 89371.60 @12.504% annually?
The DISCOUNT is upfront since the VALUE at purchase is 100,000 but you just paid 89371.60 Please note the T-bill are in tranches of 100k Put it in anothet way. Interest is on 100k but you give them 89,371.60. This(upfront) is easy to see! When it comes to trading it's more dificult! Its upfront Jamaneni!Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Member Joined: 1/21/2013 Posts: 427
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Impunity wrote:jerry wrote:Pesa Nane wrote:Ngong wrote:Haya kwa sisi wazee wangumbaru:
CBK Wants 100,000 from u @ 12.504%
After 12 months this adds to 100,000 + 12504[interest]=112,504
Withholding tax 15% of 12504=1875.60
Total profit = 12504 - 1875.60 =10628.40
In reality after 12 months you should get 100000+10628.40=110628.40
But you didnt give CBK 100K but 100K-10628.40[interest]=89371.60
So after one year they give you 100K and NOT 110628.40
Sasa jameni l give CBK 89371.60 NOW l get 100K AFTER 1 year where is the upfront interest payment tafathari?
Kwanini mambo ya pesa huwa always complicated?
Like why should CBK not just ask u to loan them 89371.60 @12.504% annually?
The DISCOUNT is upfront since the VALUE at purchase is 100,000 but you just paid 89371.60 Please note the T-bill are in tranches of 100k Put it in anothet way. Interest is on 100k but you give them 89,371.60. This(upfront) is easy to see! When it comes to trading it's more dificult! Its upfront Jamaneni! timing difference between when its earned and when its paid
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Rank: Elder Joined: 3/2/2009 Posts: 26,325 Location: Masada
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timuka wrote:Impunity wrote:jerry wrote:Pesa Nane wrote:Ngong wrote:Haya kwa sisi wazee wangumbaru:
CBK Wants 100,000 from u @ 12.504%
After 12 months this adds to 100,000 + 12504[interest]=112,504
Withholding tax 15% of 12504=1875.60
Total profit = 12504 - 1875.60 =10628.40
In reality after 12 months you should get 100000+10628.40=110628.40
But you didnt give CBK 100K but 100K-10628.40[interest]=89371.60
So after one year they give you 100K and NOT 110628.40
Sasa jameni l give CBK 89371.60 NOW l get 100K AFTER 1 year where is the upfront interest payment tafathari?
Kwanini mambo ya pesa huwa always complicated?
Like why should CBK not just ask u to loan them 89371.60 @12.504% annually?
The DISCOUNT is upfront since the VALUE at purchase is 100,000 but you just paid 89371.60 Please note the T-bill are in tranches of 100k Put it in anothet way. Interest is on 100k but you give them 89,371.60. This(upfront) is easy to see! When it comes to trading it's more dificult! Its upfront Jamaneni! timing difference between when its earned and when its paid Its paid now but earned at maturity(later) 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:
Its upfront Jamaneni!
May as many as are of the opinion say AYE!! The AYES have it! Pesa Nane plans to be shilingi when he grows up.
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Rank: Member Joined: 2/25/2010 Posts: 158
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mukiha wrote:Interestingly, they don't have their financial reports in the website.... makes you think, doesn't it?
Also, earlier this morning, I thought I saw two ads in that website: one saying that fixed deposits are paying 13% and another one saying 12%.
It is also not clear whether what they are advertising is after or before withholding tax.... now talk about "hidden" charges! My money adviser informed me that the Faulu offer is gross that is bound to reduce once you factor in the taxes. This has not been clarified in the advertisement. My adviser handles my money market investment. Keeping it all in the family
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Rank: Veteran Joined: 11/17/2012 Posts: 1,461 Location: Ngong Forest
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Pesa Nane wrote:Impunity wrote:
Its upfront Jamaneni!
May as many as are of the opinion say AYE!! The AYES have it! I GIVE 90K NOW,I GET PAID 100K AFTER 12 MONTHS.WHERE IS THE UPFRONT!!!
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Rank: Elder Joined: 3/2/2009 Posts: 26,325 Location: Masada
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Ngong wrote:Pesa Nane wrote:Impunity wrote:
Its upfront Jamaneni!
May as many as are of the opinion say AYE!! The AYES have it! I GIVE 90K NOW,I GET PAID 100K AFTER 12 MONTHS.WHERE IS THE UPFRONT!!! Can 90K give you same interest as 100K deposited in CBK now??? Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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Ngong wrote:Pesa Nane wrote:Impunity wrote:
Its upfront Jamaneni!
May as many as are of the opinion say AYE!! The AYES have it! I GIVE 90K NOW,I GET PAID 100K AFTER 12 MONTHS.WHERE IS THE UPFRONT!!! Teachers should be the best paid I think! Imagine that you give CBK 100/= today at 10% p.a. interest. Since interest is naturally paid at end of period you expect 110/= after 12 months! If they give you 10/= back today and 100/= after 12 months we call that interest 10% int paid upfront!! 100/= earns interest of 10/= on the spot¡ and your 100/= is returned after one year. Confusing or convincing? The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Interest on tbills is paid upfront!! Lets try and make this simple! Imagine your father gave you 100million to invest with a compulsory return of 5million on top after one year... Anything over and above is for you to keep! You have a choice to choose between tbills and fixed deposit at 10% each... (assuming no withholding tax) 1. You have an option of depositing the 100million in a bank to receive 10million in interest at the end of the year... You will pay your father 105million and keep 5million for your own pleasure! But you will have to wait one year to enjoy this money... 2. You have an option of buying tbills meaning you will pay 90.9million and receive 100million at the end of the year! But you will be remaining with 9.1million (100-90.9)... You then pay your father his 5million interest TODAY and you enjoy your 4.1million interest TODAY and give him the full 100million at the end of the year!!! doesn't this logic prove that tbill interest is upfront?? Some will wonder why one would choose 4.1million today instead of 5million at the end of the year! I say to those that thanx to the TIME VALUE OF MONEY the two amounts are equal! Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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@guru - asante for the simple and clear explanation. Hope this will rest the debate about upfront interest. If you are employed, would you rather get paid upfront or not? Upfront pay allows one to buy time value of money. E.g. Say you wait for the 5M to come at the year end only to see a great investment deal pass you buy in between the year. $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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@guru, (1) are you saying you can't invest 90.9M at 10% interest in a fixed acc and get 100M at end of the period? (2) if in your scenario above you give 90.9M to CBK and not 90M to get 100M there's nothing like upfront!! H-a-a-k-u-n-a-a-a ... The opposite of courage is not cowardice, it's conformity.
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