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Is Taking a Mortgage the WORST Decision Ever??
Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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bird_man wrote:2012 wrote:Lolest! wrote:Great piieces @blackman. But how many people make 25pc per year on investments? Where can you invest to get 25%??? If this were possible, why would any bank give loans at while they can put it in the 25% earner? Ya'll stop being lazy & as someone said, read threads on Wazua! I have made net returns of 37% on Coop Bank (9 months) & 12% on Equity (17 days). Of course this wont happen every year....but I think you can make decent returns at NSE. Perhaps Guka can give us some 10-20yr perspective :) It's not about laziness. If making money on stocks is as easy as you are trying to make it, we would all quit our jobs and close our businesses and gamble with our pension etc. Stocks are not for everyone, for every winner there's a loser. Our financial plans are different and yes I have a mortgage on a house that I took like 10yrs ago. The rent I get from the house is more than the mortgage now and I'll be done paying for it in 12years instead of 20. I think mortgage allows you to own a home in locations you would never own if you go the savings accumulation way. My retirement plan is that 70% of my income then will come from rental from the houses I get now. Relying on the stock exchange on/for retirement will give you blood pressure. So for anyone who wold like to do it my way through experience and not just talk, take the mortgage in an area where you know the property value will rise fast. If 1/3 or so of your salo goes to rent, think of topping up a bit and get a mortgage in a house you'll live in. This won't hurt you because you'l make sure your income always increases. Mortgage if wise is good debt in my books.
BBI will solve it :)
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Rank: New-farer Joined: 5/7/2014 Posts: 40
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MaichBlack wrote:knight026 wrote:Rollout wrote:I am neither an expert in NSE nor Kenya real estate but there are a few wrong assumptions people are making on this thread. To correct that, here is my knowledge:
1) Land do not appreciate indefinately neither is the property prices.
2) A mortgage doesn't give you ownership right to the property, the bank still hold the call opton, as a matter of fact, the bank is the investor with a floor, as the holder of the mortgage you're betting on the upside without any hedge.
3) Mortgage is never a good investment. The concept here is `cherry picking'. Otherwise, also stocks don't appreciate indefinately @knight026 - Stock trading is all about cherry picking!!! If you cannot cherry pick, you have no business being in the stock market. Don't you ever follow discussions in the investors section of wazua for example??? These discussions are always geared towards cherry picking!!! That's the name of the game - for people who know what they are doing! That's why there are threads like "Equity Bank vs KCB". It's obvious BOTH banks are growing but individuals still want to put their money in the bank with greatest return. BAT is a profit making company with an extremely generous dividend policy. But you don't see a thread encouraging people to buy the stock. Why? The price is not "right". When it is, you'll see us directing lorry loads of cash in that direction. There are some many threads in wazua. Stop being lazy and click on some of them and you will see the kind of returns serious wazuans make. All the information is there in black and white. And I have given you so many links and I don't know why you are clicking any of them! Cherry picking stocks is a myth. Even globally, and in the long run, active managers never outperform indices in the markets they trade in ( http://www.nerdwallet.co...gers-beat-market-index/ ). It is very few active managers that can outperform the index. I am assuming Maichblack is one of these outperformers, but it is misleading to tell everyone that they can do the same. Someone gave example of KCB and Equity Bank. These stocks have a Beta of 1.15 and 1.28, which means that they pretty much track the index. When the NSE index is up, both will be up. When the index is down, both will be down. Regardless of the fundamentals. Case in point: 2011. The NSE index has made 12% returns over the past 5 years. That is what the average investor made over the period.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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KenyanEconomist wrote:[quote=MaichBlack][quote=knight026][quote=Rollout]
The NSE index has made 12% returns over the past 5 years. That is what the average investor made over the period. And what has real estate done over the last 5 years? Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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@KenyanEconomist - Have you gone through the links I have provided? I'm just a small fish in wazua. There are guys who do >100%. Na sio kelele. They post when buying and when selling. All I do is learn and improve myself using information/knowledge from different source including the good people of wazua republic who are generous enough to share valuable information absolutely free of charge. My Advice to you: Be a regular in wazua. Read, read, read! Watch and learn. You'll see people executing some moves and making money like stock trading is a computer game and the money is not real. Of course you'll also 'meet' fellows who scream buy buy buy, sell sell sell without supporting their shouting with any facts - real or imagined. With time, you will be able to separate the serious investors from the shouting crew and that is when your journey to making money in the NSE will atart. People are making money in the NSE. It's not a myth. That is why the Kenyan billionaire club has 24% of their combined wealth in the NSE! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Veteran Joined: 11/2/2006 Posts: 1,206 Location: Nairobi
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KulaRaha wrote:KenyanEconomist wrote:[quote=MaichBlack][quote=knight026][quote=Rollout]
The NSE index has made 12% returns over the past 5 years. That is what the average investor made over the period. And what has real estate done over the last 5 years? Maybe better comparison is: 1.NSE last 5yrs 2.Undeveloped land in last 5yrs (around towns) 3.Houses in last 5yrs But from what I'm seeing....there is no "best" option here.Depends on people, their thinking,their values,age,lifestyle etc. Formally employed people often live their employers' dream & forget about their own.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Visit the link below: The rise and rise of Silent Billionaires in the NSE - Posted Thursday, July 4 2013 Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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KenyanEconomist wrote:MaichBlack wrote:knight026 wrote:Rollout wrote:I am neither an expert in NSE nor Kenya real estate but there are a few wrong assumptions people are making on this thread. To correct that, here is my knowledge:
1) Land do not appreciate indefinately neither is the property prices.
2) A mortgage doesn't give you ownership right to the property, the bank still hold the call opton, as a matter of fact, the bank is the investor with a floor, as the holder of the mortgage you're betting on the upside without any hedge.
3) Mortgage is never a good investment. The concept here is `cherry picking'. Otherwise, also stocks don't appreciate indefinately @knight026 - Stock trading is all about cherry picking!!! If you cannot cherry pick, you have no business being in the stock market. Don't you ever follow discussions in the investors section of wazua for example??? These discussions are always geared towards cherry picking!!! That's the name of the game - for people who know what they are doing! That's why there are threads like "Equity Bank vs KCB". It's obvious BOTH banks are growing but individuals still want to put their money in the bank with greatest return. BAT is a profit making company with an extremely generous dividend policy. But you don't see a thread encouraging people to buy the stock. Why? The price is not "right". When it is, you'll see us directing lorry loads of cash in that direction. There are some many threads in wazua. Stop being lazy and click on some of them and you will see the kind of returns serious wazuans make. All the information is there in black and white. And I have given you so many links and I don't know why you are clicking any of them! Cherry picking stocks is a myth. Even globally, and in the long run, active managers never outperform indices in the markets they trade in ( http://www.nerdwallet.co...gers-beat-market-index/ ). It is very few active managers that can outperform the index. I am assuming Maichblack is one of these outperformers, but it is misleading to tell everyone that they can do the same. Someone gave example of KCB and Equity Bank. These stocks have a Beta of 1.15 and 1.28, which means that they pretty much track the index. When the NSE index is up, both will be up. When the index is down, both will be down. Regardless of the fundamentals. Case in point: 2011. The NSE index has made 12% returns over the past 5 years. That is what the average investor made over the period. @KenyaEconomist your points are valid but there is a difference between making money and beating the index. Personally i dont mind how the index is performing so long as i am making money from dividends, bonuses and capital gains. In fact most of the times my investment decisions buck the index trend. On a yr-yr basis my perfomance may be lukewarm but in 3-5 years, different story. In any case the index is just average of the stellar and the mediocre, why set it as a benchmark? Life is short. Live passionately.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Fact with fun:  Since Equity's debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated by 1061% when share splits and bonuses are taken into account. [If my maths is correct]. I stand to be " collected" though! If you bought Equity Bank shares worth Kshs. 1 million in 2006 as of today you are a bloody Billionaire - With a B! And that is without factoring in the dividends which for this year alone would have been more than Kshs. 50 million!!!From a fellow with 1 million shillings in cash to a billionaire with a Kshs. 50 million annual [passive] income in 8 years! While doing absolutely nothing! That's an income of more than 4 million each month just because you knew the right place to put your 1 million 8 years ago. This is the point where you are supposed to say "Bloody hell!!!" Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: New-farer Joined: 1/3/2014 Posts: 32
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@MaichBlack its true people are making money. But a hypothesis like yours of compounding 25% return for 20 years needs numbers. You cant try to prove a theory based on few individuals. I trust you went to school. The least you could do is take a sample of 10% of listed companies shares, and show how they have performed over 10-20 years. That way you have a backing of solid numbers.
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Rank: Elder Joined: 4/30/2008 Posts: 6,029
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MaichBlack wrote:Fact with fun: Since Equity's debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated by 1061% when share splits and bonuses are taken into account. [If my maths is correct]. I stand to be " collected" though! If you bought Equity Bank shares worth Kshs. 1 million in 2006 as of today you are a bloody Billionaire - With a B! And that is without factoring in the dividends which for this year alone would have been more than Kshs. 50 million!!!This is the point where you are supposed to say "Bloody hell!!!" You will make me commit suicide.I regret very much!!!!!!!!!!!!!!!!!
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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mawinder wrote:MaichBlack wrote:Fact with fun: Since Equity's debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated by 1061% when share splits and bonuses are taken into account. [If my maths is correct]. I stand to be " collected" though! If you bought Equity Bank shares worth Kshs. 1 million in 2006 as of today you are a bloody Billionaire - With a B! And that is without factoring in the dividends which for this year alone would have been more than Kshs. 50 million!!!This is the point where you are supposed to say "Bloody hell!!!" You will make me commit suicide.I regret very much!!!!!!!!!!!!!!!!! @Maich, is that correct! In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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knight026 wrote:@MaichBlack its true people are making money. But a hypothesis like yours of compounding 25% return for 20 years needs numbers. You cant try to prove a theory based on few individuals. I trust you went to school. The least you could do is take a sample of 10% of listed companies shares, and show how they have performed over 10-20 years. That way you have a backing of solid numbers. And you are very good at ignoring links. Have you visited the link on post# 146 Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Angelica _ann wrote:mawinder wrote:MaichBlack wrote:Fact with fun: Since Equity's debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated by 1061% when share splits and bonuses are taken into account. [If my maths is correct]. I stand to be " collected" though! If you bought Equity Bank shares worth Kshs. 1 million in 2006 as of today you are a bloody Billionaire - With a B! And that is without factoring in the dividends which for this year alone would have been more than Kshs. 50 million!!!This is the point where you are supposed to say "Bloody hell!!!" You will make me commit suicide.I regret very much!!!!!!!!!!!!!!!!! @Maich, is that correct! Absolutely!!! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 6/2/2011 Posts: 4,818 Location: -1.2107, 36.8831
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MaichBlack wrote:Angelica _ann wrote:mawinder wrote:MaichBlack wrote:Fact with fun: Since Equity's debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated by 1061% when share splits and bonuses are taken into account. [If my maths is correct]. I stand to be " collected" though! If you bought Equity Bank shares worth Kshs. 1 million in 2006 as of today you are a bloody Billionaire - With a B! And that is without factoring in the dividends which for this year alone would have been more than Kshs. 50 million!!!This is the point where you are supposed to say "Bloody hell!!!" You will make me commit suicide.I regret very much!!!!!!!!!!!!!!!!! @Maich, is that correct! Absolutely!!! Maich, you are WRONG on the figures, though right on the "concept". 1000% means 10 times, i.e if bought Equity Bank shares worth 1M/- in 2006, now they will be worth 10.61M/- Not bad in 8 years. Receive with simplicity everything that happens to you.” ― Rashi
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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@Angelica_ann - See the link below. Please note the article was posted in May 2013. At the time the stock was treading at 34 - 35 levels. Today is at 42/=. Do the math! Equity BankNever count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: New-farer Joined: 5/7/2014 Posts: 40
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Hindsight is 20/20. It's easy to look back and choose equity bank now that the returns are in. Does it mean that Equity will make 1,000% over the next 8 years? If I asked you to choose which stocks will make 1,000% in the future, can you say? Fact is that no one knows the future (unless you have insider information). I'm not saying the stock market is a bad investment vehicle. I'm simply saying that if you don't diversify your holdings, you may miss out on the 1,000% gainer in the name of cherry picking. And diversification means your returns will roughly match those of the index.
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Rank: Elder Joined: 12/6/2008 Posts: 3,548
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This is some nice "jua kali" risk analysis but given i have been deep in jua kali sector let me try: 1. A Prime Mortgage Candidate:"We - the world -can't do without You" kind of EMPLOYEE. For them this is NOT even something to think about, it can never be a WORST DECISION ever as you put it, it is a simple decision, say an actuarial scientist or whatever they are called ( i understand they are very high in demand "high value professionals" and can do all the fancy maths up there), or a specialist surgeon, highly sought after intellectual, Judge e.t.c, IMMEDIATELY go shopping for a GREAT house within perhaps a quarter of your salo, people can't do without you so you better start right off living la vida loca, remember people can't do without you so your salary will always rise, no need to save, for what? (Ok save and invest another quarter and)if money is too much "tumia watu nyumbani" And you are an EMPLOYEE not BUSINESS MAN, let your family start living well. 2. SUB PRIME "We can do without you",.EMPLOYEE..before you take a mortgage on this one, do th MATHS properly, hawa ni ma-undegrads, some tu accountants polytechnic people, some MBAs and sijui Master's in making movies and reading news e.t.c. 3. MWANA BIATHARA...i dont know if they get mortgages or they are called "home loans", this one you have to pima yourself using above criteria adjusted for free kiwanja! A New Kenya
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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dunkang wrote:MaichBlack wrote:Angelica _ann wrote:mawinder wrote:MaichBlack wrote:Fact with fun: Since Equity's debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated by 1061% when share splits and bonuses are taken into account. [If my maths is correct]. I stand to be " collected" though! If you bought Equity Bank shares worth Kshs. 1 million in 2006 as of today you are a bloody Billionaire - With a B! And that is without factoring in the dividends which for this year alone would have been more than Kshs. 50 million!!!This is the point where you are supposed to say "Bloody hell!!!" You will make me commit suicide.I regret very much!!!!!!!!!!!!!!!!! @Maich, is that correct! Absolutely!!! Maich, you are WRONG on the figures, though right on the "concept". 1000% means 10 times, i.e if bought Equity Bank shares worth 1M/- in 2006, now they will be worth 10.61M/- Not bad in 8 years. Yeah @dunkang - I made a computation error. Thanks for the correction. I hope @mawinder has not committed suicide yet!!! The percentage rise is still 1061% but not a billionaire yet! He he he. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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KenyanEconomist wrote:Hindsight is 20/20. It's easy to look back and choose equity bank now that the returns are in. Does it mean that Equity will make 1,000% over the next 8 years? If I asked you to choose which stocks will make 1,000% in the future, can you say? Fact is that no one knows the future (unless you have insider information). I'm not saying the stock market is a bad investment vehicle. I'm simply saying that if you don't diversify your holdings, you may miss out on the 1,000% gainer in the name of cherry picking. And diversification means your returns will roughly match those of the index. Again, any one who was in the NSE before 2006 and didn't get into Equity has no business being in the stock exchange! It used to be the darling of skerians [now wazuans]. It has made most of them rich. Most have made more than 1000% returns over this period because they knew when to get out and when to get back in. Just search the archives and you'll see. This is not "in hindsight". We lived it - and still are - my brother/sister. That is why I advised you, be a regular; watch and learn. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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Just to add some perspective to this conversation, the decision to take out a mortgage is not all about returns on money spent, there are other qualitative aspects that one cannot monetise. Many are talking about the option of acquiring land and putting their own dream house, in case you want to do that, i would suggest you talk to people who have done that. You see, free land is not anywhere near convinent areas, so you can put up a nice house somewhere in Rongai, then you have to contend with insecurity, endless traffic jams (spending 4 hours in traffic every day), the pain of waking the children at 4.00 am to prepare them for school, bad roads and undeveloped utilities etc. I know a few people who abandoned their dream houses to return to the city to rent a house where they can operate normally. So mortgages may be expensive but you get to retain your sanity, you will not have peace of mind in that dream house if its in the wrong neighbourhood "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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