wazua Tue, Mar 24, 2026
Welcome Guest Search | Active Topics | Log In

7 Pages«<34567>
Advise on taking a loan to purchase stocks
Options
Previous Topic · Next Topic
MaichBlack
#41 Posted : Wednesday, July 13, 2016 9:52:53 AM
Rank: Elder

Joined: 7/22/2009
Posts: 7,840
@ulekijana - In my opinion, the best advice you have been given is to avoid the loan (for now) save and invest your savings.

Open a different account and have the accountant send the 50k of your salary to that account every month. Alternatively, have a standing order in your salary account so that 50k is sent to the second account every month. Never use the money from the second account for anything other than investments. Make sure you don't have an ATM card, mobile banking etc. for that account.

Using the money in that account, slowly buy your target shares every month or every couple of months.

Reasoning: You are to pay 20% interest every year. Chances of you making 20% on shares this year and next year are slim. Not impossible but slim especially because of the market emotions due to the elections. We don't know how strong the emotions will be and which side they will swing but they are definitely a factor! And remember, even if you make the 20%, that will just be enough for interest payments.

So, starting NOW save and use the savings to buy shares. Do this this year and next year (election year). Next year you can review the situation and decide if you still want to take the loan. And by then you will have shares worth at least a million bob (buying cost) despite whatever decision you will make! To fast track your wealth accumulation, you can deposit ALL your side hustle money into the investment account.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
Back to top
  | | Edit by user: Wednesday, July 13, 2016 10:48 AM | Reason: Not specified
sparkly
#42 Posted : Wednesday, July 13, 2016 10:10:41 AM
Rank: Elder

Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
Cash sitting in a bank savings account is money losing value due to inflation.

If he buys shares with a DY of 10%, his real cost of purchase is reduced to 10%. The share just needs to rise by 10% and he will have broken even. Its easy to make 10% in this market by trading the ranges eg Kengen 5.40-8.90, NMG 137-180, Britam 10-15, Centum 40-50 Bamburi 150-185.

Hapa he needs some crash course on bollingo bands, RSI and MACD.
Life is short. Live passionately.
Back to top
  |
MaichBlack
#43 Posted : Wednesday, July 13, 2016 11:00:19 AM
Rank: Elder

Joined: 7/22/2009
Posts: 7,840
@ulekijana

Have a look at this

And please note: I am not discouraging you from ever taking a loan to invest. All I am saying is that for a loan to make sense, the earnings accruing due to the loan should be more than the interest payments. Chances are that this will not be true in your case for the next two years. If you could make 50% as you had envisioned in your earlier post, then it would be a no brainer to take a loan at 20% coz that is 30% in your pocket. But expecting that to happen this year and next year is highly unlikely - unless of course the market emotions totally ignore the elections next year. But with the war mongering, PEV predicting idiot politicians on the lose, it will be extremely hard for the market to ignore the elections.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
Back to top
  |
Sufficiently Philanga....thropic
#44 Posted : Wednesday, July 13, 2016 11:29:02 AM
Rank: Elder

Joined: 9/23/2010
Posts: 2,225
Location: Sundowner,Amboseli
Really great advice from membersApplause Applause Applause
Go ahead and take the plunge. This is your time, it's now or never.
If you must take the loan........remember to put some in the soil. Promising counties at the moment include Nakuru and Nanyuki(Laikipia), where you can buy from an acre onwards, then fence it and put up a mabati structure for your farmhand. You can be visiting the farm once every month just to show your farm hand WHO IS THE BOSSsmile In the meantime, your property will be appreciating in value and you can be making small improvements to it every now and then, as cash allows, to increase value and eventually start earning from either rentals or agriculture.
If you should buy stocks with part of the loan, @Sparkly has given some valuable advice.
Remember, Stocks/Treasuries/FDRs are good for cash flow, real estate for value appreciation.
You need both!
Happy investing!
@SufficientlyP
Back to top
  |
instinct
#45 Posted : Wednesday, July 13, 2016 10:43:36 PM
Rank: Member

Joined: 8/17/2007
Posts: 294
MaichBlack wrote:
@ulekijana - In my opinion, the best advice you have been given is to avoid the loan (for now) save and invest your savings.

Open a different account and have the accountant send the 50k of your salary to that account every month. Alternatively, have a standing order in your salary account so that 50k is sent to the second account every month. Never use the money from the second account for anything other than investments. Make sure you don't have an ATM card, mobile banking etc. for that account.

Using the money in that account, slowly buy your target shares every month or every couple of months.

Reasoning: You are to pay 20% interest every year. Chances of you making 20% on shares this year and next year are slim. Not impossible but slim especially because of the market emotions due to the elections. We don't know how strong the emotions will be and which side they will swing but they are definitely a factor! And remember, even if you make the 20%, that will just be enough for interest payments.

So, starting NOW save and use the savings to buy shares. Do this this year and next year (election year). Next year you can review the situation and decide if you still want to take the loan. And by then you will have shares worth at least a million bob (buying cost) despite whatever decision you will make! To fast track your wealth accumulation, you can deposit ALL your side hustle money into the investment account.


Roger that
Back to top
  |
fabrego
#46 Posted : Thursday, July 14, 2016 1:27:45 PM
Rank: Member

Joined: 7/18/2008
Posts: 9
Location: Nairobi
@ ulekijana
You have clearly said you want to trade so I won't bog you down with advice on building a portfolio and putting small amounts each month. I assume you understand that trading is high risk. But high risk = high returns. You have time on your side. And one year into it, you can liquidate your positions and take your losses and lessons if things don't go your way.
My fear is the 20% loan. Debt is good but that rate is high considering you are using the money to play the stock market. How about you join a sacco and get 12% rate or better yet convince people to invest with you. You sound like you can.
Back to top
WWW BLOG
  |
Ebenyo
#47 Posted : Thursday, July 14, 2016 8:56:53 PM
Rank: Veteran

Joined: 4/4/2016
Posts: 2,016
Location: Kitale
If its a MUST that you should take the loan,fine take it BUT DONT TRADE on shares.Instead buy land with the money and build rental houses.They will pay off the loan while u remain with something small.
Towards the goal of financial freedom
Back to top
  |
The Great
#48 Posted : Thursday, July 14, 2016 9:13:11 PM
Rank: Member

Joined: 9/9/2015
Posts: 233
I thought wazuans clearly see the current real estate bubble. Its risky to take a loan for it these days.
"Buy when there's blood in the streets, even if the blood is your own."
Back to top
  |
The Great
#49 Posted : Thursday, July 14, 2016 9:16:29 PM
Rank: Member

Joined: 9/9/2015
Posts: 233
Kindly do farming on leased land. PS its time to change our mindsets from value appreciation of real estate to buying below market price
"Buy when there's blood in the streets, even if the blood is your own."
Back to top
  |
enyands
#50 Posted : Thursday, July 14, 2016 10:28:06 PM
Rank: Elder

Joined: 12/25/2014
Posts: 2,301
Location: kenya
ulekijana wrote:
Wassup everybody,

I am thinking of getting into stocks well. I have a very small portfolio of around Kshs 90K currently invested in stocks.

I want to really get in stocks this time since it is the worst market we've had in 3yrs.

I currently work for an investment firm in the tech department with a net salary of 100K.

Today I approached my bank for an unsecured loan of 3M to put into this but I was only eligible for an unsecured loan of 2M i.e. based on my payslips, banking history and current savings of around 91K etc.

I was given a rate of around 20.2% interest for a period of 72months on condition I take take a credit card and my employer always deposits my salary into that specific bank only. They have different rates for different offers i.e. 20.19, 22.3 and 23.1.

Based on calculation with the bank representative, I will be making monthly payments of about Kshs 48,995 per month for the 72 months.

Total payment: Kshs 3,527,640

The bank really seems like they want to give me this loan and the bank rep was really pushing me to even fill in the forms today and wrap up the process tomorrow with the employer letters but I am really having 2nd thoughts and I am literally scared :o !!

Now my concern is this,

1. I am very jittery since this is my first ever loan. I have never taken a loan even a small one of 200 bob as hard as it may seem to believe in my life so this is the scariest thing I have ever done.

2. I just finished campus last year. My net salary is around Kshs 99K.
So from the payments this leaves me with 50K of which 21K goes into my rent, water & elec bill. Which leaves me with about 28k to spend. If I subtract 7k for transport(i.e. mat on most occasions and an occasional uber for the nights I have to be in the office till 10pm), 3k for internet and 3k for phone that leaves me with 14k for food plus additional costs i.e. entertainment.

I do not have any obligations to anybody at least in the next 7yrs but paying half of my salary is really something that is stressing me even before I take the next step.

3. I notice I have to make around 1.8m profit inclusive of 5% capital gains tax and brokerage fees to breakeven of the 1.53m loan interest from the investment.


Now my question is;

Is this a worthy venture? Has anyone done this before(i.e. taken a loan to trade? If you did, did you break even?)

The stocks I want to get into are WTK AT 180, SCAN at 18, KAPC AT 80-85, EGAD at Ksh 18-20 and TPSE(currently @Kshs 20) if it ever gets to Ksh 15 since it's election time and it is a bit scary for that. I also want to get into EQTY(at 36) and CO-OP(at Ksh 15)

Another thing I am wary of is increasing loan interest rates during the 6yr period due to inflation and the massive loans we are undertaking now as a country


You should be 24 yrs I guess .you still young . Peleka 50k supposedly for loan repayment and take it to a SACCO as your monthly comtribution. Invest in this sacco this July till next year july.you will have 720k making you eligible for 2.6m loan from sacco.

So next year July before elections apply for loan from sacco at a rate of 12% (cheaper than 20% from bank) and buy stocks since the prices will be even lower because of elections a month later ....


After one year (i guess you will be 26 yrs)if there is no PEV 2017 sell it off and pay off the loan.Not only would you make profit but will get something that kids of your age don't think of...."experience of multiplying money."

Note : stocks is a risky business . Put money you are ready ,very ready to lose and should you lose ,you won't be shaken .

You challenged me alot.when I was your age partying was the in thing. Should I have been taught financial investment that early would have been far by now ...so kudos to you man.

Should you succeed,plz come and give back to the well that quenched your thirst,yaani come back to wazua and contribute .

NB the reason I quote your age is not to make you feel inferior rather to learn the virtue of patience .don't be over ambitious when it comes to investments. I burnt my fingers and I'm still learning.so take advantage of patience and play it with your tender age smile
Best of luck
Back to top
  | | Edit by user: Thursday, July 14, 2016 10:31 PM | Reason: Not specified
7 Pages«<34567>
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Wazua Investor Theme
Powered by YAF | YAF © 2003-2009, Yet Another Forum.NET
Copyright © 2026 Wazua.co.ke. All Rights Reserved.