Yes, RULE9, I agree with you, but it is also your responsibility to do the basic calculations: 1. The bigger question is what is the risk investors are taking. newTweetLink.href = "https://twitter.com/intent/tweet?text=" + encodeURI(text) + "&url=https://www.moneyweb.co.za/investing/is-finbond-really-paying-15-5-interest/&via=Moneyweb"; var newTweetLink = document.createElement("a"); The terminology is used out of context and is purposefully designed to mislead investors.”. This is shown below. It has then divided it by five and compared it against the initial capital amount and expressed this as a percentage. 2) They are DELIBERATELY and MALICIOUSLY deceiving the public … Let them explain how this type of advertising passes TCF and basic common respect for your potential clients? No, you can’t just take the initial million as the capital. to quote a return on the initial advance only should constitute a crime in the finance sector. MTN loses appeal, must pay dealer R11.4m in damages, Rupert responds to Swiss Covid-19 vaccination uproar, Two forex trading companies go belly-up, owing investors upwards of R1bn, Black doctors overwhelming racially profiled by medical aids, The SA unit trusts with the highest net outflows in 2020, Write-offs being sold to unsuspecting used-vehicle buyers, [TOP INTERVIEW] The worst appears over for SA banks. “They calculate the maturity value correctly, but they portray the 11.5% compound interest as if it is in fact effectively 15.5%. Think loan sharks. The product is actually paying an interest rate of 11.5%. FINCA Impact Finance subsidiaries include DR Congo, Malawi, Nigeria, Tanzania, Uganda and Zambia. 2. In 2012, FinBank merged with First City Monument Bank (FCMB), allowing them to become the 7th largest bank in Nigeria in terms of branch network and coverage. Money lent out over R5bn. As the below advert shows, however, Finbond has actually linked two different rates to the product. FinBank Plc., also referred to as Finbank or FinBank Group, is a commercial bank in Nigeria. var oldTweetLink = document.getElementById("tweetLink"); Most people do not take the trouble to properly analyse what they are investing in. On the whole, investors should be wary of anything that is sold as an ‘effective rate’. SA has more than triple the number of cases in any other African nation. FinBank S.A was incorporated in the year 2000 as a leasing company operating under the name Finalease. It accrues annually, hence taxable. Thanks Patrick. Unfortunately your assumption would be wrong. Patrick Cairns is now South Africa Editor at Citywire, which provides insight and information for professional investors globally. The uproar regarding SA’s procurement of the Covid-19 vaccine. After all, there isn’t a single multi-asset high equity fund in South Africa that has given investors even a 10% annualised return over the past five years. if (text === "") interest exemption a multiple times over the 5yr term. function getSelectedText() { if (window.getSelection) { You could use a CAGR approach to a fixed term product, that’s how I would assess it. Long term investor , and especially pensioners , should not invest in such a high risk investment bank . WHEN the interest is calculated (monthly, yearly, at the end of the period?) Anglo vs BHP: Which one to add to your portfolio? To compare to other investments, you use the above to calculate the value This is a tiny little bank. I am personally not surprised to be informed that Finbond does this but I am disappointed to hear that ABSA also did it as I normally have reasonable trust in ABSA. In other words, 15.5% is not comparable to anything else. Please email us at RED Accessibility. Tax on local investment interest is another factor, when it exceeds R23,800 / R34,500 level for Individuals under/over 65-age. textParagraph.addEventListener("mouseup", function (e) { imageLoading: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/spinner_moneyweb.gif", Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. Contact Now! Your contributions are always interesting and pertinent. Finbank, a local Burundi bank has had phenomenal success since nearly being bankrupt five years ago. Finbond Micro Finance Phone and Map of Address: Shop F11 Station Plaza, Mitchell's Plain, 7785, South Africa, Western Cape, Business Reviews, Consumer Complaints and Ratings for Micro Loans in Western Cape. The reason that this ‘effective rate’ is problematic is that it is calculated using a bit of reverse engineering. If they lending more than they have in deposits then that means they must have another funding source such as bonds or other facilities. Crucially, there is no other type of investment that uses this kind of measurement. imageBtnNext: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/bg_direction_nav.png", Facts about Africa FINCA has been in sub-Saharan Africa since 1992. If, however, you elect to reinvest that interest, you start to see the effect of compounding. This is a shocker. Five payments of R115K + the end capital equates to an effect annualized return (IRR) of 8.5-8.7%, nothing better than the average bond fund. If the interest is paid out at the end of the term of 5 years then the interest paid may attract tax at a higher level , eating into your gains. If you take out that interest monthly, you will obviously see no growth in your initial investment, and you will continue to earn exactly the same nominal amount every year for five years. var textParagraph = document.getElementById("textParagraph"); The Bank is an award winning institution that forms part of the KIPCO Group and has an extensive international network spanning five continents. Your AR Staffing Specialist. The only issue being the comparability of this product. Indeed, you’re correct. Finbond Mutual Bank specializes in the design and delivery of unique value and solution based savings and credit solutions tailored around depositor and borrower requirements … This is illustrated in the table below. else { The higher the return the higher the risk……. FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. 3)Possibly contravenes the code of conduct under the FAIS act… maybe the newly constituted FSCA should start with this one? You may wish to refer to the FIMBank Group Contact list which can be located here and can also contact us by email or by filling in the contact form shown below. However, one good thing is one will NOT pay tax on the (combined/aggregate) interest upon maturity, but rather the interest “accrue” each tax year of the investment….so one can benefit form the annual R23K p.a. A rational and moral investor would not p on this crowd if they were in fire. The minimum investment of R1 million might put it beyond the reach of a lot of people, but it still sounds like a tantalising offering, particularly for anyone looking for somewhere to put a large pot of retirement savings. Of anything that is sold as an ‘ effective rate ’ is problematic is that is! 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