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

Thank you for replying.

Mostly due to greed I admit. I figure the bear is here with us now for only a short while. I want to get a big piece of this pie as possible.
I figure I am young and may not be able to get this opportunity to risk such a large chunk of my income as I get older and responsibilities increase.
Most of my work mates in my pay range are driving 600-1.2m cars serviced on loans and I figure since I am not in a hurry to get a car, let me risk for a small investment.

My dream is to convert that 2m to 6m in 3yrs whilst actively trading each day.
I know this is damn hard i.e. 50% returns each year.

So if you take that loan,you wont be living but surviving

what happens incase you lose your job? Get an emergency(medical etc),schooling?

He is fresh from school and he needs to survive now.Once he has a standing order for the loan he will work harder and become more ambitious to get more disposable income.If he has a lot of money with no plans he will just waste it and not do anything productive.

He should try this
Rent and utilities-22%
Transport-7%
Internet and phone-6%
Food and entertainment-14%
Loan repayment-40%
savings for rainy day/opportunities/room for interest rate shocks-11%