The Zero-Interest Sacco Loan Strategy
This strategy can make your investment journey ridiculously easy.
Did you know you can access a Sacco loan at virtually no cost? Let me show you how.
Mike has been contributing to his Sacco for the last 5 years and has accumulated Ksh 1.5 million. This means he can borrow up to three times his savings to acquire assets that generate cash flow.
A Sacco loan charges about 12% interest per year on a reducing balance. At the same time, Mike earns annual rebates from his deposits. Assuming his Sacco pays an average of 11% net rebates, his Ksh 1.5M savings will generate about Ksh 180,000 every year.
Now, Mike chooses to self-guarantee (avoiding guarantors) and takes a loan of Ksh 1 million, payable in 2 years.
Here’s How the Math Plays Out
- Total rebates in 2 years: Ksh 360,000
- Total interest charged on the loan: Ksh 129,763
- Net gain from rebates after covering interest: Ksh 230,237
That’s essentially Zero-Cost Credit.
But let’s push it further. Mike doesn’t let the loan sit idle. He invests the Ksh 1 million in a low-risk infrastructure bond yielding 12%. After 2 years, that alone earns him Ksh 240,000.
Combine the Numbers
- Net gain from rebates: Ksh 230,237
- Bond returns: Ksh 240,000
- Total income in 2 years: Ksh 470,237
That’s how you borrow at no cost—and still walk away wealthier.
The Secret Is Simple
- Only borrow less than your Sacco deposits.
- Be in a Sacco that is giving you at least 11% net rebates.
- Channel that credit into safe, income-generating assets.
After 2 years, you can rinse and repeat—building more assets while your Sacco rebates and bond income keep compounding.
Do you think you could pull this Zero-Interest Strategy off?
See Year 2024 SACCOs below:
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