Our company COOP dividends are out! And I wasn’t even expecting them. It’s like forgetting that you left money in your pocket. Haha!
Being a personal finance geek, I’ve always been fascinated with cooperatives (or coop) whenever I hear about them through colleagues. They always say that the returns are nice and ranges from 8-10% annually, and it’s also handy to be a member if you need to take out loans.
That’s why in my current and past two employers, I joined their cooperatives as early as possible. Too bad I stayed for only a short while in the first two and eventually had to withdraw the amounts I was able to save. In my current employer, I’ve already invested for 9 months so far and today was my first time to receive dividends or what they call interest on capital. Oh yeah!
What’s a coop?
A company commonly has an accredited employee coop which is a separate legal entity from itself but is usually just for its eligible employees. Our company’s coop is a multi-purpose cooperative with general operations as a savings and lending facility among others.
Membership fee is a one-time salary deduction of Php250.00. There is a required purchase of a minimum 50 shares in a year equivalent to Php5,000.00. You can have it deducted automatically from your salary in monthly installments and it will serve as your investment in the coop. The funds pooled by the coop in turn serve as capital to be able to lend to its members, and to do other activities such as selling consumer goods. From the interests and profits, the coop distributes its earnings to the investors annually.
How much are the returns?
Before, I used to think that what you contribute to the coop is a savings deposit. But now I realized that it’s really more of an investment. You only get to withdraw it when you terminate your membership and there is no guaranteed interest rate but instead gives you a share of its earnings.
To better illustrate how much you can gain from a coop investment, here’s an actual computation of what I received today:
This year’s dividend declaration is a generous 10%! The amount is computed from the monthly average capital. I decided to invest Php7,100.00 a month and have been doing so for the past 8 months as of the October cutoff. In turn, I received Php2,638.34 today in dividends. Just like that! How much more could it be next year when I rollover the total of Php56,800.00 and add more on top!
If you need clarifications on how to compute the monthly average capital, just leave me a message on the comments section below.
Why invest in a coop?
If you are a corporate slave like me, salary deduction is one of the best ways to automate and make investing a habit. This option in an employee coop is very attractive. From testimonies of its long-time members, it’s easy to get yourself familiar with the historical performance of the coop. You even personally know its officers since they’re your colleagues as well. And the best part for you too is they’re working as volunteers – meaning all the profits from the operations of the coop are maximized by the investors. *Wink wink* If you are the entrepreneurial type, you can even get your hands on being an officer yourself and experience managing the coop like running a business.
As a caveat, again this is an investment. Though you can definitely gain from even just one year in a coop just like my personal experience above, there is no guarantee of returns and risks accumulate to you too as an investor. That is also why joining one is a commitment for the long-term. As for me, I’m currently considering it as a fund to keep money I’m setting aside for my parents’ retirement, and also for diversification.
If you decide to push for it, it is definitely rewarding and might suit people who are a bit wary of more complex investments such as stocks, in my opinion.
So there you have it. Explore if your company has an employee coop! And ask around on its performance. It might just be even better than other investments and might be your first step to making your hard-earned money work for you.