Savings Vs shares in a sacco

Shares vs Savings in Mombo Sacco

When it comes to saving and investing with a SACCO (Savings and Credit Cooperative), you may come across the terms “shares” and “savings.” While they both play a crucial role in your financial journey, it’s important to understand the differences between the two.

  • Shares: Why do they exist?

Shares in a SACCO represent your ownership in the cooperative society. By purchasing shares, you become a part-owner and have a say in the decision-making processes of the SACCO. The price of a share is typically fixed, and each member is required to purchase a specific number of shares. These shares can’t be used as collateral for a loan, but they earn dividends and provide certain rights and privileges within the SACCO.

  • Savings: What’s their role?

On the other hand, savings in a SACCO are the regular contributions made by members towards their individual accounts. These savings accumulate over time and earn interest periodically. Savings are an essential part of building your financial security and can be withdrawn or used as collateral for loans within the SACCO. The SACCO provides different savings plans with varying interest rates and terms, allowing you to choose the one that best suits your needs and financial goals.

The main difference between shares and savings lies in their purpose and function within a SACCO. Shares represent ownership and provide members with certain rights, such as voting in the Annual General Meeting or electing representatives. Savings, on the other hand, serve as a way to accumulate funds and earn interest over time. They are accessible for withdrawals and can be utilized to meet personal financial goals or as security for loans.

Key Takeaways

It’s worth noting that shares and savings work hand in hand to support the overall functioning of the SACCO. While shares represent your ownership stake, savings contribute to the pool of funds available for lending to members. The combination of members’ shares and savings allows the SACCO to provide affordable loan facilities and other financial services.

Understanding the difference between shares and savings can help you make informed financial decisions. Shares provide you with ownership and decision-making power, while savings allow you to accumulate funds and earn interest over time. By leveraging both shares and savings, you can maximize the benefits of being a member of a SACCO and work towards achieving your short-term and long-term financial goals.

In conclusion,

Shares and savings in a SACCO serve different purposes and have distinct roles. Shares represent ownership and confer specific rights within the SACCO, while savings contribute to the pool of funds and earn interest for individual members. By understanding the difference between the two, you can make the most of your membership in a SACCO and build a solid foundation for your financial future.

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