Borrowing to buy BOI Shares????????

boomboombazza

basically, I already have 200 BOI Shares which I got for My 21st in Jan 2007 when the price was about 16/17. with them now around 5 ish I think it has to be a good longterm investment (5-10 years.)

I was thinking €20k worth.

just wondering if people think this is a good or bad idea. I'm sure most will say dont do it buy I'm a risk acceptor:p

how much would a 20k loan over 5 years cost me roughly per month in total over the 5 years. obviously the return would have to outweigh the cost of the loan to make it worth while.


on a side note my dad sold about 200k worth of BOI when they were about 16/17 and is wondering should he get back in now?

pvt.joker

Never ever borrow to buy shares.

Its a quick way to the poorhouse

drunkmonkey

It will cost you €392.83 per month for 5 years, that's at 6.9%....(tesco or first active)

Personally I think your nuts, if David Mc Williams is even half right it would be a very bad investment...

I'd like to see the cost per barrel of sweet crude oil in 5 years on the futuers market? Maybe buy 20k of oil now and sell it in December when prices are at a premium...

irish_bob

boomboombazza wrote: »

basically, I already have 200 BOI Shares which I got for My 21st in Jan 2007 when the price was about 16/17. with them now around 5 ish I think it has to be a good longterm investment (5-10 years.)

I was thinking €20k worth.

just wondering if people think this is a good or bad idea. I'm sure most will say dont do it buy I'm a risk acceptor:p

how much would a 20k loan over 5 years cost me roughly per month in total over the 5 years. obviously the return would have to outweigh the cost of the loan to make it worth while.


on a side note my dad sold about 200k worth of BOI when they were about 16/17 and is wondering should he get back in now?

no bank would lend you money to buy shares right now , besides , ive never heard of anyone borrowing to buy shares

randombar

Absolutely insane, the rule is only invest money you could live without! Things could get a lot worse than they all ready are!

boomboombazza

I had a feeling this would be the response but my reasoning is as follows.

borrow 20k.
costs lets say 7k in interest(it wont cost this much will it?
thats 27k

at todays shareprice you'd get approx 3650 shares(havent checked share price in the last few days but have an idea that its around 5.30/5.50)

in 5 years its not inconcieveable for the shares to be €10 each considering what they were a year or so ago

thats €36k - €27k = 9k profit


the reason i'd borrow is to keep my cash for other shorter term investments and not have it tied up for 5 years

I can afford the loan and after 5 years if its not in profit I still own the shares and can sit on them a little longer



what was the comment about david mcwilliams? what did he say?

pvt.joker

boomboombazza wrote: »

in 5 years its not inconcieveable for the shares to be €10 each considering what they were a year or so ago

In 5 years its not inconcieveable for the shares to be 2 euro each considering what they are now.

The old saying about a fool and his money etc.....

randombar

in 5 years it could be conceivable that they could drop more, or level out at what they're at now, or only go up to 6.00

There are so many possibilities you'd want to be a mad man to take the risk.

I have a bit of money saved at the moment and I'm still not going to invest in the banks yet!

boomboombazza

GaryCocs wrote: »

in 5 years it could be conceivable that they could drop more, or level out at what they're at now, or only go up to 6.00

There are so many possibilities you'd want to be a mad man to take the risk.

I have a bit of money saved at the moment and I'm still not going to invest in the banks yet!

you had northern flop shares so I wont be taking your advice:D. I'm only joking!!!:D:D:D


I know it seems a bit mad but as I said as long as the bank doesnt go belly up in 5 years i'll still have the bones of 4000 BOI shares. the way i see it instead of spending 20k on booze over 5 years i'd be spending 20k on a loan and have 'an asset' at the end of it. if that asset is worth 15k,20k or 40k in 5 years it doesn't really matter.. .it only matters what its worth when you go to sell the asset which could be i 10 years long after the loan is paid back

Diarmuid

boomboombazza wrote: »

the way i see it instead of spending 20k on booze over 5 yearsk

The big difference is you're not borrowing from a bank to go boozing. You are spending your disposable income each week/month. A safer alternative is to put your booze money into a savings account or a Quinnlife fund each month and at the end of 5 years you have an asset. No borrowing and you end with a diversified asset.

I would defiantly not do what you are considering.

randombar

Ya I learnt a fair bit from the northern rock experience.

1 - Allways invest in something you know about or research something you don't know about.

2 - Invest only money you can live without.

3 - Nothing is guaranteed.

4 - Pick a price you want to get out at, have that price in your head and when it reaches that price GET OUT. Don't wait until it gets to it's highest (You'll never win!).

5 - Trading is a brilliant way to make money but there's a reason why people are on massive money to do it

6 - http://www.fool.com

7 - http://finance.google.com

Oafley Jones

Doesn't BOI have 71% exposure to property in UK and Ireland at the moment. Could see them dropping a lot further to be honest.

Also, how low do people think the share price has to fall before a SWF would become interested?

Oafley Jones

boomboombazza wrote: »

in 5 years its not inconcieveable for the shares to be €10 each considering what they were a year or so ago

thats €36k - €27k = 9k profit

Why do you believe that? The share price of 16 euro was at the top of the bubble, when there was plenty of liquidity in the market. It'll take a lot, lot longer - if ever - that BOI returns to anything near those levels. The fall out has just begun, fear is beginning to set in and I feel that the folly of the last ten years will leave a deep scar on the Irish banking system.

boomboombazza

Diarmuid wrote: »

The big difference is you're not borrowing from a bank to go boozing. You are spending your disposable income each week/month. A safer alternative is to put your booze money into a savings account or a Quinnlife fund each month and at the end of 5 years you have an asset. No borrowing and you end with a diversified asset.

I would defiantly not do what you are considering.

no, instead of disposable income on booze,it's disposable income on a loan.

it was a rubbish comparison by me in the first instance

justfortherecor

It's a nonstarter anyways, as a poster above already said, no bank will loan you money to invest in shares.

boomboombazza

justfortherecor wrote: »

It's a nonstarter anyways, as a poster above already said, no bank will loan you money to invest in shares.

ah i'll just tell them it for something else. My salary is ok so they should give me 20k handy enough

TheBazman

Ironically if BOI were willing to lend you the cash to buy BOI shares then this should be taken as a good sign - they are fully confident that they will at least get their money back (ie) they feel the shares will go higher.

Anyway I totally agree you should not borrow to buy shares, particularly in the current environment. I do think BOI shares are a good buy in the long term. The dividend yield is very high at the moment but in the short term you need to be able to live with the volatility in your capital

Diarmuid

boomboombazza wrote: »

no, instead of disposable income on booze,it's disposable income on a loan.

It's not disposable income if you have to make repayments on a loan, it's just another expense like your ESB bill. If you are short money for a few months you can stop paying into your fund, you don't have that option on the repayments.

boomboombazza

would your opinions be any different if i borrowed from a friend/sibling or is it just that borrowing to invest is bad idea.

hold on, what about those who borrowed to invest in property ie probably most of you guys. whats the difference. dont tell me property is in tatters, your probably still up 300% over 10 years

randombar

Borrowing from a friend/sibling is nuts full stop!

Also, would you invest in a house right now?? I reckon you wouldnt invest in a house because you think it would go down, the banks are going to go the exact same way!

boomboombazza

GaryCocs wrote: »

Borrowing from a friend/sibling is nuts full stop!

Also, would you invest in a house right now?? I reckon you wouldnt invest in a house because you think it would go down, the banks are going to go the exact same way!

i'd hold off on the property until after xmas atleast but i reckon there could be a bit of value after xmas but i suppose only time will tell.

as a long term investment BOI are good value right now. they may have a bit to fall yet,who knows but if you buy now theres a good chance you will have a positive return in 5 years. as i said if i dont have a positive return in 5 years time i still have 4000 shares in one of our main banks which will have to come good on the next economic upturn.

I'm sorry for asking for advice and then not taking it but i'm just trying to get my view across. you all seem to think i'm mad but i bet your mostly conservitive bean counters. how many accountants posted in my thread?:D

Oafley Jones

boomboombazza wrote: »

as a long term investment BOI are good value right now.

Yet you go on to say

boomboombazza wrote: »

they may have a bit to fall yet,

boomboombazza wrote: »

who knows but if you buy now theres a good chance you will have a positive return in 5 years.

Why do you believe this?

boomboombazza wrote: »

as i said if i dont have a positive return in 5 years time i still have 4000 shares in one of our main banks which will have to come good on the next economic upturn.

And when do you think this upturn will happen? What will drive it?

kmick

Diarmuid wrote: »

The big difference is you're not borrowing from a bank to go boozing. You are spending your disposable income each week/month. A safer alternative is to put your booze money into a savings account or a Quinnlife fund each month and at the end of 5 years you have an asset. No borrowing and you end with a diversified asset.

I would defiantly not do what you are considering.

My 25k quinnlife fund is losing 500 quid a day at the moment so Id steer clear. However you could probably make some money shorting bank stocks at the moment.

Oafley Jones

kmick wrote: »

My 25k quinnlife fund is losing 500 quid a day at the moment so Id steer clear. However you could probably make some money shorting bank stocks at the moment.

Borrowing money to borrow shares - not a good idea.

boomboombazza

Oafley Jones wrote: »

Yet you go on to say



Why do you believe this?

And when do you think this upturn will happen? What will drive it?

yes i think they are good value ,but as i said they may have a bit to fall yet. i dont have a crystal ball thats why i said they may fall a bit yet.

as for the up turn. everything swings in round abouts. good value shares and good value property etc will generate investment which will have a knock on effect in various sectors, financial, construction etc creating job which create more spending and profits. this isn't my opinion,this is the way economies go up and down. obviously there is more to it than what i said above but you get my drift

Idu

This has to be a joke or a wind up. You clearly know very little about how markets work. You seem to believe that just because BOI were trading 16 last year or whenever that they will definitely get back to this level.It's ridiculous to assume that. Also your plan is so vague. What research have you done on BOI? What do you know about their price history? When will this recessionary cycle end? Are interest rates going up? Is inflation in check? Are we nearing the end of the current credit crisis? Have we seen the worst of whats to come for banking stocks? Are Israel and Iran going to war? Do you have a clear idea about any fundamental market driving issues?

The idea that BOI must be a bargain at this price is ridiculous because if it were then I'm sure there would be a hell of a lot more demand for their stock than there is. The market rarely gets these things wrong

boomboombazza

janets_on_clubs wrote: »

This has to be a joke or a wind up. You clearly know very little about how markets work. You seem to believe that just because BOI were trading 16 last year or whenever that they will definitely get back to this level.It's ridiculous to assume that. Also your plan is so vague. What research have you done on BOI? What do you know about their price history? When will this recessionary cycle end? Are interest rates going up? Is inflation in check? Are we nearing the end of the current credit crisis? Have we seen the worst of whats to come for banking stocks? Are Israel and Iran going to war? Do you have a clear idea about any fundamental market driving issues?

The idea that BOI must be a bargain at this price is ridiculous because if it were then I'm sure there would be a hell of a lot more demand for their stock than there is. The market rarely gets these things wrong

do you actually want me to answer these questions? most of them are open to opinion and debate.

when will this recession/credit crisis/oil crisis end? how should I know? nobody knows some say the the worst of the credit crunch is over but again thats open to debate.

are iran & Isreal going to war? you tell me if you know the answer to this question i'd love to hear where your hetting your info, I sure as hell dont know,i'm not mates with their leaders of those countries,maybe you are

i never said they would go back to 16. i said its highly possible that over a 5 year period they could go back toward 10 when things begin to turn.

your asking me all these questions like im some idiot when infact nobody knows the definitive answers to most of the questions asked.

your post is seriously condesending, no need to talk to me like i'm a retard.

Oafley Jones

boomboombazza wrote: »

do you actually want me to answer these questions? most of them are open to opinion and debate.

when will this recession/credit crisis/oil crisis end? how should I know? nobody knows some say the the worst of the credit crunch is over but again thats open to debate.

are iran & Isreal going to war? you tell me if you know the answer to this question i'd love to hear where your hetting your info, I sure as hell dont know,i'm not mates with their leaders of those countries,maybe you are

i never said they would go back to 16. i said its highly possible that over a 5 year period they could go back toward 10 when things begin to turn.

your asking me all these questions like im some idiot when infact nobody knows the definitive answers to most of the questions asked.

your post is seriously condesending, no need to talk to me like i'm a retard.

Tulip bulbs are a steal at the current prices, you should invest in them.

TechieEddy

At the end of the day no one knows what going to happen but I think its important to follow certain guidelines and not borrowing to invest is one of them.
Investing is risky enough as it it without adding to it.

Tulip bulbs are a steal at the current prices, you should invest in them.

Idu

boomboombazza wrote: »

do you actually want me to answer these questions? most of them are open to opinion and debate.

when will this recession/credit crisis/oil crisis end? how should I know? nobody knows some say the the worst of the credit crunch is over but again thats open to debate.

are iran & Isreal going to war? you tell me if you know the answer to this question i'd love to hear where your hetting your info, I sure as hell dont know,i'm not mates with their leaders of those countries,maybe you are

i never said they would go back to 16. i said its highly possible that over a 5 year period they could go back toward 10 when things begin to turn.

your asking me all these questions like im some idiot when infact nobody knows the definitive answers to most of the questions asked.

your post is seriously condesending, no need to talk to me like i'm a retard.

Didnt mean to sound condescending but you seem uninterested in anyone's opinion on why this might be a bad idea. Your whole theory seems to be that there's a good chance that BOI shares will go back up. But why should they? At its most simplistic there's a 50% chance their shares will go up and down. What fundamentals do BOI have that tilt the odds in their favour? That's the question you need to be able to answer before you take on a sizeable monetary committment. Otherwise you'd be as well off taking out a loan and putting it on red or black or on an even money horse.

I don't know the answer to these questions but I bet if you spoke to Davy's or Goodbody's or any stockbrokers they could at least give you some advice backed up by fact rather than speculation.

pocketdooz

Boom

You seem to have your mind made up on this hair-brained scheme.

It is an absolutely terrible, terrible, terrible idea.

But . . . seeing as you are completely ignoring the advice you asked for initially by posting here and are adamant about doing it either way let me just burst your bubble now by telling you that you will not be able to borrow money from anyone to invest in shares.

You are not a 'sophisticated' investor (this is not a slander - this is a legal term), therefore you will not be able to get a margin account.

Lucky for you.

Are they a good price at €5 because they were once at €18. This is completely flawed logic. . . .

How low can they go - surely they can't go lower than €4 ?

You cannot ask these questions . . . they can go to zero or close to it (northern rock, barings bank, worldcom, enron, Refco - will i go on ???)

No, they would not be good value at €5 if they subsequently fall to €4. The dangerous thing about buying stocks at lower valuations is that each additional price decrease is relatively worse for your holding (i.e. a drop from €18 to €17 is about 5%, a drop from €6 to €5 is about 17%

Bank of Ireland are a good LONG TERM investment at their present valuation. Long term is ambiguous though as it could be 2/3/5/10 years before we see a full turn around.

That's why it's called speculation. NEVER BORROW TO SPECULATE, YOU WILL GO BROKE

Anglo will be gone by the end of next year, either merged or taken over. Their cap. is too small, they do not have the govt/cultural links that AIB / BOI have and nearly all of their loan book is collateralised against Irish and UK property. They need cash and they need it fast (why do you think they are offering 8 % on savings accounts, etc.)

When this happens, BOI shares will tank even further. As the ECB keeps increasing it's rates to combate high food and energy inflation in the Eurozone, the cost of your loan will continue to rise, thus increasing your re-payments. This loan will also (if you can get it in the first place) - prevent you from getting a car loan or mortgage or loan to go travelling anytime between now and 2014 - think about that !

Nor will BOI be taken over or enter a merger agreement with anyone . . .

There are no banks that would touch it right now. Although their cap. is small (c. €5 B if I remember right) - there are no banks willing to take on their committed loans in the current market.

Also, there are no banks with that kind of cash lying around that don't want it in case they need to shore up their BS soon. Case in point is RBS's recent calamity of a takeover of ABN, which forced them into a rights issue.

The only people who can afford to takeover BOI now are the soveriegn wealth funds and they have much better global opportunities than BOI

My recommendation :

Read Fortune's Formula and Rich Dad, Poor Dad.

By the sounds of it you are quite young. That's great, you have plenty of time to invest. Going broke by borrowing to buy downtrodden, depressed shares of a troubled, Irish property-exposed bank at the beginning of a recession is NOT the way to start your investing career !!