Why Joining A Sacco Is Your Best Bet: Here Are The Top 5 Saccos In Kenya

In Kenya, Saccos play a key role in uplifting the lives of members. Millions of

What makes a Sacco a good form of savings or investment?

Savings with Saccos helps you develop financial discipline and you reduce spending to make compulsory monthly deposits.

You can borrow loans to start or grow your business after saving with a SACCO for a minimum of six months. Unlike other deposit-taking financial institutions, all members earn interest on the deposits made annually.

Invest with Saccos and earn good returns annually. As a member, you will earn dividends on shares and interests on deposits annually. Saccos also provide investment opportunities like Real Estate Investment to help members own homes.

Why are Saccos important?

As a member of a Sacco, you’re able to cultivate a savings culture. Instead of spending your income frivolously, you can save with a Sacco.

You can access financial support from Saccos. Your accumulated savings with a Sacco help access credit. You will get 2 to 3 times loans as much as your savings at low-interest rates

Saccos improve the economic status of members. Many Kenyans have grown their businesses and created more wealth by joining Saccos.

Return on Investment. Just like any other investment opportunity you expect good returns on investments. Saccos give dividends annually on shares and interests on deposits made.

Read More: Here Is Why Your Sacco Dividends Will Reduce Soon

What is the difference between Saccos and CIS?

Sacco’s pool funds from members and are run by a board of directors elected by members. They provide financial inclusion by mobilizing savings and giving credit to members. They are low-risk investment opportunities. They are regulated by SASRA.

The collective Investment Scheme involves asset fund managers who help investors invest in money market funds or other equities. Examples of money market funds include Treasury bills, commercial paper, banker’s acceptances, negotiable certificates of deposit, repurchase agreements, and short-term debts.

CIS pools funds from individuals and companies to make a collective investment on money market funds or other equities. Asset fund managers providing collective investment schemes include Cytonn Investments, Nabo Africa Money Market Fund, Zimelle Money Market Fund, Alphafrica Money Market Fund, Gen Cap Hela Imara Money Market Fund. They are regulated by Capital Markets Authority.

Read More: The Evolution Of SACCOs Into Investment Institutions

Differences

1. When you save with Saccos you can borrow loans 2 to 3 times as much as your savings. Collective investment schemes focus on investing in money market funds and do not offer loans.
2. Saccos finance investment opportunities and projects of members like real estate investment, own land, or home while CIS does not offer financial support to real estate investment opportunities by members. Unlike CIS, members can contribute funds to certain projects and earn returns on investments.
3. Interest rates of Saccos are standard but on Money market funds the rates fluctuate due to inflation. Interest in money market funds is calculated daily due to inflation rates while in SACCOs is calculated annually.
4. In Saccos you earn both dividends on your shares and interests on savings while in Money market funds you only earn interest on your investment.
5. The main aim of Saccos is to save, borrow and invest while on the other hand, CIS focus on investments in money market funds and other equities like government bonds. In SACCOs, you can save and use your savings to leverage on loans. Members can take loans and invest in business opportunities to grow.

What you should look for before joining a SACCO?