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Getting a loan to buy Mumias shares
Rank: Member Joined: 7/16/2009 Posts: 22
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I have applied a loan of ksh 100000 to buy Mumias shares now that there been upward movement.Is that a good investment?
6880186
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Rank: Member Joined: 8/29/2008 Posts: 571
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Unfortunately,no.Never ever buy shares on loan.And in any case,why mumias??
Ali Baba
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Rank: Elder Joined: 2/26/2008 Posts: 4,449
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boss,you are asking after you've already decided?...what informed your decision? give more information if you want advise not consolation.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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@Ptor. We put into shares what we can afford to lose. How do u repay ur loan? Hotels will always serve the fruits/vegs of the season. In stocks,ur duty as a trader is to identify the HOTshare of the season. The opposite of courage is not cowardice, it's conformity.
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Rank: Member Joined: 2/12/2008 Posts: 345
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Let me get this. Asking for a loan..with a fixed predictable interest rate charge...to invest in shares..whose return on investment is uncertain..unpredictable.. unquantifiable...????? You my friend,are what makes people call investing gambling. Please note,the house always....ALWAYS wins. Best of luck.
..if it is not expressly prohibited in law.. DO IT!!!!
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Rank: Member Joined: 2/12/2008 Posts: 345
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Every form3 business studies student...every economics student..knows that Savings=Investment..... that debt is NOT savings...plus sincerely..You do realise that additional handling costs on bank loans translate to an annualized loan charge of atleast 27% ..meaning this plus broker charges means that in the very least you are more than certain mumias MUST go up 30% for u to break even..or just return the Loan back n get back to where u where befor the loan..considering a loan to buy shares. King solomon must hav had u in mind when he quipped '..it's all chasing after the wind!..' please do somethin else with the loan.. Set up a kiosk for water,vegetables,fruits or something...as long as it's a consumable thing..guaranteeing actual cash flow.
..if it is not expressly prohibited in law.. DO IT!!!!
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@ptor; You are putting the cart before the horse! Jammo has said this inumerable time: you never buy your stock in one large order! So if you get the sh100k from the bank,and decide that you want to nuy the MSC shares,don't give the broker one fat order! Split the 100k into,say,ten portions of sh10,000 each. Then commit to purchase 10k worth of the shares each month for the next 10 months. In the ten months,you will be paying back the loan to the bank,presumably using your salary. If your loan is repayable in 12 months at,say 15% interest,the bank will expect you to pay about sh9k each month. This means that you can get sh9k per month,si-ndio? So here comes the question: why take the loan [and pay interest] while you can actually afford to buy the shares with your salary? Behind the gardens...Behind the wall...Under the tree (Including: Red...Dark Blue...Yellow) Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 6/3/2006 Posts: 553
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@ptor,if you are an investor,who has done his/her homework,then it makes sense The thicker the thigh the sweeter the pie. The thicker the thigh the sweeter the pie.
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Rank: Member Joined: 7/16/2009 Posts: 22
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Im repaying the loan using salo
6880186
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Don't take the loan. You don't need it! Ask the bank to calculate for you the installments. then commit that amount (from your salo) to buying MSC in small portions every month. Tha't the beauty of stocks; unlike land,you can buy small lots that fit into your pocket without having to take a loan. Usiwe na haraka...ya kununua zote mara moja. Eg.,the last six months,I've been putting sh3k to sh4k into two counters every week...one week here,the next week there.... Behind the gardens...Behind the wall...Under the tree (Including: Red...Dark Blue...Yellow) Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 7/29/2006 Posts: 6
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I get your sentiments my kenyan fellow.
Let me give you the two sides of the coin:-
Our kenya NSE is an emerging market and there is no guarantee that most of the counters are driven by 'KEY' fundamentals....we need to appreciate that speculations also plays a key factor here at NSE...
Peolple who have made money will tell you clearly that it has been a combination of both.
So my advise is this:-
Have a reflection of your portfolio and see what do you really want;
* Is it pure Investemnt ?? i.e Long-term Investments of being a part of Blue Chip
* Or is it making and loosing $$$and move....& by-the way when you go the speculative way be ready to burn your fingers as well at one given time....BUT you can also gain highly.
NOW with your Loan of 100K....Think deeply of:-
-a) Interest you'll pay,payback period for the loan to elapse vs rate of return in your NSE Investment.
As per the previous trends - Remember Mumias moved from 49 to now 6 after split. Is there any gain?? and by how much?? This is now your homework.
For me whichever way you take,you can still gain - But remember NSE as i said is an emerging market any thing is possible with your 100K. Think Think Think & dont be moved by emotions and stocks euphoria.
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Rank: Member Joined: 11/2/2006 Posts: 519
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@mukiha,
That's an interesting analysis of dividing the 100k to 10k but what if after thinking twice,thrice the deal is still too good? Why use your money while you can use somebody else's? We need to learn the art of borrowing. I recently borrowed to buy Safaricom at 2.85/-. I'd no cash on me and I could not let that deal go by.
So in my opinion and experience the risk is sometimes worth it.
ili iwe funzo...
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Rank: Member Joined: 6/3/2006 Posts: 553
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@mtaalam, Exactly,but only applicable to investors The thicker the thigh the sweeter the pie. The thicker the thigh the sweeter the pie.
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Rank: Member Joined: 5/16/2009 Posts: 145
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@ptor;
I personally have no problem taking a loan and invest in specific counter as long as am reasonably sure that counter is going at discounted price. I have done it before and continue doing it with measures of success. Suppose you took the loan in March this year and bought MSC. The share was buying at Sh4,plus commissions was Sh 4.20/=. If you were to sell it today at 6.20/= you would have realized 47% in three months. Keep you profit of 40,000 and give the bank their money + interest of 7,000/=. An easy way to become rich. Isn't it? he!!!!
Suppose you were selling sukumawiki as somebody advised. Do you think,you'd have done better? Over to you brother. My advice: take the loan. However,do not narrow your options to a single company. Just be opportunistic and time well and make good choice. Remember: BUY LOW.
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Rank: Member Joined: 10/11/2007 Posts: 213
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@ stonewewe
If it was a bbk loan then they would have to pay six month interest early repayment penalty
Me first,U next
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Rank: Member Joined: 5/16/2009 Posts: 145
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@waria
My view is applicable if there is incentive for early repayment. In the case of BBK loan,and since he is paying the loan by his salary,the borrower has Ksh 147,000 to invest on another counter for another period of 3-6 months. If he makes super choices,and if sufficiently lucky to identify good stocks,my take is that his capital will rise to over Ksh 450,000 in one year. No kidding here. Dead serious.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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It's always easy to make arguments with the benefit of hindsight. The real question right now is: Do you think MCS will touch 9bob in the next three months? If YES,what is your percentage level of confidence? 90%,80%,70%....what? Behind the gardens...Behind the wall...Under the tree (Including: Red...Dark Blue...Yellow) Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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hope it went well for ptor
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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Today Mr. Obiero you are starting to heal. You are really digging for old information which is good. That is how healing starts. Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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Gatheuzi wrote:Today Mr. Obiero you are starting to heal. You are really digging for old information which is good. That is how healing starts. Slowly but surely. Atleast I dint take a loan!
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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