Mangs wrote:MaichBlack wrote:sparkly wrote:MaichBlack wrote:@ulekijana
Have a look at thisAnd 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. @Stocksmaster made a similar prediction in 2013, sold his stocks and bought dollars... The he missed the 2013 bull run and KShs strengthened against the dollar!
See post #41
MaichBlack wrote:
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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.
Taking a loan to put into stock market can only make economic sense if you are either a company insider with good secret information that the public doesn't know about yet and will result in a rally once the news hits the streets, or you want to buy founder shares in a company that's about to list. If not, kindly keep the stock market investment to your routine savings (I hope you did so). Otherwise the volatility at the stock market may force you to walk around with your cardiac doctor due to frequent risk of heart attacks every time you look up the share prices. The smartest thing since you sound like a smart young chap would be to only take a loan and put it into enterprise. Get into business; at least there you will have control over your investment. I could suggest land but at the moment real estate is too overpriced; almost too overvalued to too-good-to-be-true rates. So if you buy that half or quarter acre plot in the middle of nowhere at those inflated prices you may end up in a real estate value trap.
My suggestion would be you stay off the loan until you're sure of what exact business you want to do it...hopefully not the stock market. Leave the stock market to your savings. Even during a bull market there are stocks with negative beta that can still disappoint so don't bet on those annual percentage returns so much however bullish the market may be.