underweight wrote:Hi Wazuan, a friend of mine is contemplating between taking a Sacco loan of KShs 2 Million at an interest rate of 1% (one Percent per Month payable in 4 yrs) and invest in the NSE. At the end of it all he will pay a total interest of 24.5% of the principal sum taken or invest an equivalent through a fixed monthly installment for 3 yr. Wat is the best course of action between this two considering the market condition at the moment? Your advice is highly appreciated.
sema tu ni wewe.
3 yrs you say? From econometrics, using confidence band models, it was shown that economic indicators take 2 -8 quarters to adjust to a major decision/policy change. eg inflation, unemployment etc etc So factor this to your question and take a look at whts happening around. CBk mopping up pesa from the economy, so taking a loan now is better than later when rates go up.
Taking it to the market is another thng all together. Undoubtedly, the market will go up, but like a good market, you cant predict when and how fast and by how much.
my advice would be take the loan, lipa na mshahara (not with gains from the market), sit tight n be a millionare 8 quarters from now. bt dnt pick paka na access unless they show a turn around. Falling revenues is as discharge is to the clap. even if profits go up. You can only cut costs so much.
fikira zangu tu.