Use SACCO to Grow Your Wealth.

 

1.       Joining a SACCOs

Choose a SACCO that does the basics saving and lending and low investments

Join with people you know and can trust like colleagues, family members, or friends

Preferably choose the employees SACCOs if for a church, choose from mainstream churches

Check the age of the SACCO existence more than 10yrs old is good

Most government agencies have nice SACCOs, if employed by the government or your relative is a public servant can introduce you.

Avoid newly registered SACCOs and are heavily advertised

Be wary of SACCOs that are aggressively in land business.

 

2.       Saving regularly and borrowing wisely

The best time to start is immediately in your first employment and commit about 10%

Instill deduction from the source like in pay slip, if not employed issue a standing order from your bank account.

Start saving small like Ksh. 1,000pm and grow monthly saving progressively. For example, when you get a salary increment, increase the saving with a similar margin  

When borrowing, borrow the amount you can pay monthly without affecting your monthly contribution. Don’t reduce monthly savings to cover for loan deductions

3.       Growing wealth in the SACCO

Reinvest dividends and interest earned back to SACCO to boost saving and compound your investment. Don’t take the dividends and say is time to celebrate.

Example: if you save Ksh. 3,000pm and earn 10% interest for saving

year	saving per month	saving in a year	interest 10%	total saving
1	3,000.00	36,000.00	3,600.00	39,600.00
2	3,000.00	75,600.00	7,560.00	83,160.00
3	3,000.00	119,160.00	11,916.00	131,076.00

 

 

 

 

Table 1 Monthly saving for 3 years without withdrawing dividends

 

 

With 3,000pm, the wealth will grow to Ksh. 131,076 if you reinvest the dividends “Money has started working for you”

4.       securing your wealth in the SACCO.

·         Don’t overcommit your savings by guaranteeing for very many members

·         Don’t guarantee members you can’t lend your money because guaranteeing is like lending your saving

·         Always attend SACCO AGM, ask questions. Mostly you can tell if things are going well with officials’ answers.

·         Read SACCO financials and if it looks complex, carry a copy and request a friend or a family member who is an accountant to interpret for you. I have done this for many people without charging them.

 

5.       Final thoughts

A SACCO should be the first step in saving and investing, you can use the SACCO loans to grow your business before starting to borrow from Banks. Remember Banks are businesses that must grow shareholders funds but in SACCO, you are both a shareholder and a customer.

 

Thanks, and have a good Investing week.

 

Next week; how to spot a scam