A digital SACCO for your business

SFA is a Savings and Credit Co-operative (SACCO) whose main objective is to mobilize savings from members and in return provide capital funding facilities.

• Member-owned, empowering members to contribute to the organization’s capital — and to reap the benefits.
• Member-governed, awarding each member with one vote to elect our governing Board of Directors, who set policy and direction for the organization.
• Autonomous and independent, practicing our core values of integrity, people, service, innovation, education, and celebration.
• Education-driven, providing financial education and training to help members and non-members succeed and to contribute positively to the local economy.
• Community-focused, encouraging our employees and members to give back as volunteers, donors, and caring citizens.
• Cooperative-minded, supporting laws and financial services that benefit not-for-profit cooperatives and our members.

It depends on what you are looking for in a financial institution, the level of attention that you want to receive as a customer and the rapidness that you need access to your funds when deposits are made into your bank account.

But if you want more personalized customer service and more attention to detail then a SFA is the place to go. Also, SFA account is not closed unless you as a member makes the decision or breach organization’s policy or constitution. On the other hand, banks do make the decision to close a customer’s account on their own.

What you need to focus on, in our opinion, is ownership.

At a SFA, your money is owned by you. As a not-for-profit entity run by a Board of volunteers, all income is returned to the members or invested back into the building in the form of infrastructure or other investments.

This, generally, allows SFA to offer lower interest rates, higher returns on deposits, and demand a lower (read: cheaper) fee schedule because nothing is being siphoned off the top to pay executives and ownership.

OUR TAKE!

We would naturally say that a SFA is better. It’s a member-owned financial cooperative. The board of directors are members just like you. And generally you get better interest rates and lower loan rates. Any profit the SFA makes is channeled right back into the SFA for the benefit of the members.

Put simply, Banks are for profit institutions owned by people who invested in it and who want a good return on their investment, while SFA is owned by members (YOU) and only need to make enough profit to operate and pay their staff, and any extra goes back to the depositors as interest.

SFA offer better interest on savings, have more “personable services” and have lower interest rates.

SFA offer the same type of services you would find at a bank. But at a bank, you are a customer.

At SFA, you are a member and equal owner with every other member. You have an equal vote.

Here are some TAKEAWAYS:

SSCF:

• Is not-for-profit institution.
• As members, each person that deposits money has a share of ownership
• SFA only serves its members as per its constitution.
• Members elect a volunteer Board of Directors to represent our interests
• Is a member service-driven
• Return profits to members in the form of lower loan rates, higher savings rates, and free or low cost services.
• Federally insured by the TCDC 
• Exempt from federal income taxes.

BANKS:

• Are profit-oriented institutions
• Can serve anyone in the general public
• Have customers with no ownership to their organization (unless they also own shares separately)
• Have a paid Board of Directors who represent the Shareholders (owners); customers do not have voting privileges’
• Controlled by shareholders and paid officials
• Return profits to Shareholders
• Federally insured by the Central Bank (BoT)

The annual percentage yield (APY) is the real rate of return earned on an investment, taking into account the effect of compounding interes. Unlike simple interest, compounding interest is calculated periodically and the amount is immediately added to the balance. With each period going forward, the account balance gets a little bigger, so the interest paid on the balance gets bigger as well.

Formula and Calculation of APY

APY standardizes the rate of return. It does this by stating the real percentage of growth that will be earned in compound interest assuming that the money is deposited for one year. The formula for calculating APY is:

Where:

• r = period rate
• n = number of compounding periods

What Annual APY Can Tell You

Any investment is ultimately judged by its rate of return, whether it’s a certificate of deposit (CD), a share of stock, or a government bond. The rate of return is simply the percentage of growth in an investment over a specific period of time, usually one year. But rates of return can be difficult to compare across different investments if they have different compounding periods. One may compound daily, while another compounds quarterly or biannually.

Comparing rates of return by simply stating the percentage value of each over one year gives an inaccurate result, as it ignores the effects of compounding interest. It is critical to know how often that compounding occurs, since the more often a deposit compounds, the faster the investment grows. This is due to the fact that every time it compounds the interest earned over that period is added to the principal balance and future interest payments are calculated on that larger principal amount.

Comparing the APY on Two Investments

Suppose you are considering whether to invest in a one-year zero-coupon bond that pays 6% upon maturity or a high-yield money market account that pays 0.5% per month with monthly compounding.

At first glance, the yields appear equal because 12 months multiplied by 0.5% equals 6%. However, when the effects of compounding are included by calculating the APY, the money market investment actually yields (1 + .005)^12 – 1 = 0.06168 = 6.17%.

APY vs. APR

APY is similar to the annual percentage rate (APR) used for loans. The APR reflects the effective percentage that the borrower will pay over a year in interest and fees for the loan. APY and APR are both standardized measures of interest rates expressed as an annualized percentage rate.

However, APY takes into account compound interest while APR does not. Furthermore, the equation for APY does not incorporate account fees, only compounding periods. That’s an important consideration for an investor, who must consider any fees that will be subtracted from an investment’s overall return.

If you deposited $100 for one year at 5% interest and your deposit was compounded quarterly, at the end of the year you would have $105.09. If you had been paid simple interest, you would have had $105.

The APY would be (1 + .05/4) * 4 – 1 = .05095 = 5.095%.

It pays 5% a year interest compounded quarterly, and that adds up to 5.095%. That’s not too dramatic.

However, if you left that $100 for four years and it was being compounded quarterly then the amount your initial deposit would have grown to $121.99.

Without compounding it would have been $120.

X = D(1 + r/n)n*y

= $100(1 + .05/4)4*4

= $100(1.21989)

= $121.99

where:

• X = Final amount
• D = Initial Deposit
• r = period rate
• n = number of compounding periods per year
• y = number of years

Nop!

Don’t convince anyone to join SFA, just educate them and let them make their decisions.

Keep sharing information with your friends, and remember 4SW… some will, some wont, so what, someone’s waiting.