Is an installment loan useful instead of a WPK?
Hi, a small question regarding a loan.
I am currently considering applying for a €15,000 loan for general use from my bank (Comdirect).
The idea behind it:
I currently have €10,000 in stocks/ETFs in my portfolio. My original idea was to apply for a securities loan or Lombard loan.
Since the current interest rate at the WPK is 8.4% and I have to "pledge" my portfolio if I use the credit limit, I considered whether an installment loan would be better for me.
If I were to pay off the debt immediately (interest, etc.), it would be around €1,000-€2,000, depending on the amount and interest, for five years. After that, I'd have, say, €15,000 in the account and repay my monthly installments of €250-€350.
Should there be a price drop or something similar, I can use my credit limit without the bank having to worry. If the prices remain stable for the next five years, I'll pay off my loan as usual. So, I'm moving it from my main account to the "loan account" listed under my portfolio (everything goes through a bank).
I'm currently investing EVERYTHING I have, so I'll be back in overdraft (10.5%) on the 1st. If I had the credit limit, I would "track" my liabilities. That means €10,000 outstanding = I have €10,000 in my account (€0 liability). If I invest €1,000 more, I'll have a €1,000 liability that I'll pay off as quickly as possible.
The prospect of profit isn't my top priority, but rather the large amount of money I can use and invest in an "emergency." I don't use any of the money personally . If there are no price drops, I'll simply continue, and apart from the previously paid paying interest, I'll be at +/-€0.
If something comes up, I can always pay off the full amount (although the interest for five years would still be paid). It would be annoying, but it's possible to avoid any outstanding debts. You never know what might happen.
Thanks in advance and greetings!
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| No, I only take my own money to invest. I want the loan as
| have buffers. The money is not spent.
so somehow save back….
Why don't you put 250-350 € on a daily money account every month?
At €300 you would have saved your personal buffer to €15,000 after 5 years.
An installment loan will cost you around €2,000 at an interest rate of 6.5%…
It doesn't make sense to me…
Good Morning,
Did I understand you correctly?
You want to borrow to use the money without investing the securities?
If you mean that, I don't think this is a good idea.
You'd use money that you don't have, and I'm binding on years of repayment.
You can't look in the future what happens or doesn't happen in all sorts of ways and therefore you should never bet with money that you don't have.
If I misunderstood your text, forget my text.
Good Morning:)
No, I don't want to spend the money, I want to hold a framework I can just use to invest.
The "money" remains on the account. If I have €10,000 residual debt, I have at least $10,000 in the account. So it could always eliminate the liability. If the courses fall within the next 5 years, I invest "more" and we say the liability of -1000€. But I will compensate as soon as possible (next reward)
Hi TimHQ,
I'm just talking from MY personal view and personal experience.
Rational loans (no matter what type) I completely reject. Once at the end ALWAYS pays more than the original price. Is comparable to when you go to the overdraft account, only that of the overdraft interest is significantly higher than what you pay for an installment loan.
The BEST solution (even if it's time-consuming and stupid) (firstly, if you want/use something)): SAVE! If you need something that costs €750 and you can save €250 monthly, then it takes 3 months, BUT you save interest for rat loans! In addition, rat loans run over several MONTHS. What do you mean that you have to pay several MONTHS long, a certain sum, which you have long since at home +(!) the associated interest for the rat loan!
Example! You want to buy NOW (in January) ABSOLUTELY for 750€. Make an installment loan (or installment purchase) with (example) 10% interest. Then you pay €825 at the end. So 75€ MORE than if you had saved some time. ADD(!) then (independent of interest) comes the monthly burden! Rate payment/purchase on rates means that you pay the True Debit in monthly rates! Let's say in 10 monthly rates. This means (plus the interest) that you pay monthly approx. €82.50 paid! And this 10 MONTHS(!) long, NO MATTER what else happens in time (financial) DIR! Do you know what URPLÖTZLICH changes financially in 6 months? What if YOUR company goes bankrupt? Or you (why) will be released? Or increased costs to get you? Do you know how your financial situation will be in 6 months? You can plan for one or two/three/five years in advance, BBER only with the numbers of NOW! If I get a heating bill, this concerns the year TWO years ago. Then I at the beginning to consciously/intentionally save heating costs/consumption, BUT this I will feel FIRST TWO(!) later! 2022 Entry = result of savings (financial) 2024!
Okay, then I do
Instead of a rat's loan, stop disposing! Not good! Dispozines and/or even patient overdrafting can be up to 19% interest! Significantly more expensive than a rat loan!
A current account was around 10(!!) YEAR long in the dispo! I could use the interest/numbers, but I couldn't afford anything else (NOT!)! (Because of my few revenues!!!)
The ALL BEST(!!!!!!!) is: If you want to buy something, then you should save the sum AND/OR as a reserve (Ansparter Notgroschen/Eiserne Reserve!!!) AND/OR be able: to pay monthly rate credits +(!!!) plus to save money in order to pay this rate credit beforehand!
Previous payment of rat loans!: It may happen (must not!) that if you pay a rate loan before the contract expires, it will be even more expensive to get a certain amount BECAUSE of Non-contractual interest income, a fee! This is also to be noted!
From a MY point of view, rat loans are a milking machine for DIE JENIGEN, the last rat loans! BECAUSE(!!!) get the BANKS money!
In addition: To invest, you should only ALWAYS use THE money, which is NOT needed for life (NOT depend on it!!!!) as it is invested with GUTEN banks for several years! Example: In 2024, you will invest €10,000 in fixed interest bonds with a term of 10 years. If you then need this yellow after 2 years (AFTER investment) forget it. This is like: "Today the key is thrown away, but after 10 years it only appears again, NOT!!!!
Consider EXACTLY(!!!!) what you want to do financially.
1) Rational loan over 10, 12, 20 months, with a monthly charge/payment that you also have to comply with ALWAYS, which alone already means ADDITIONAL COSTS monthly AND(!!!) at the end of the deposit was more expensive than if you had saved a few months? (Spring takes longer, but saves interest/costs and trouble/work!
If you'd like to invest, THEN will inform you extensively. (Example: You think ETF would be your thing… Then inform you about public/legal (possibly quite specific shipments) + TL + Sat1/Prosie + Focus and/or T-Online and/or BBC, CNN, and so on to get a current situation to get from it YOUR(!) To receive opinion/view!
Always consider the following saying: "The BANK ALWAYS wins!" Art is to use it for its own purposes and/or allow it to work for itself!*ggg
All good to you and I hope I could help you and/or be interested in one or the other!*g
Thank you for the detailed answer and your time!
I will ask the question again and unformulate.. I'm sorry, I made them too unclear… I want to use the loan as a "refund" as I always fully leverage my equity and invest directly on the first day.
If anything happens, I have to sell titles. If I have 15k as a deposit on the account, it is more pleasant.. The money is NOT issued. I'll pay the interest on a hit and back on the first day.
Thus, 15k liabilities remain open as credit, so always have min 15k on my account to be "break even" with my bindingness.
If something happens or the courses "crash" over the next 5 years, I have a refund that I can exploit.
If I still have 14k credit "open" but have 15k in the account, I have more than my liability (can pay the loan back at any time)
Part 1:
Hi TimHQ,
if something interests and/or grabs me (interest moderate), then I take the time to answer (even if it takes 1 or 2 hours!) I am interested in the subject and the person/subjector and I would like to help them.
I used to be with Comdirect, whose rate credit calculator used. For a loan of 15,000€ and 60 months duration (60months = 5 years), you need a monthly rate of 284.52€ numbers. After 5 years of duration, you have repaid €17,071.20. (effective interest rates of 5.34% and nominal interest rates of 5.21%)
You said you had $10,000 in shares/ETF. ETF is safer than shares. Even better if you have spread far (so not everything has invested in a share or in an ETF). Shares are more speculations (but also dividends (for as long as you have them and the company is successful and has many shares, you can make money with them). If you want to speculate with shares (low purchase, expensive sale) you must of course pay attention to the courses, but also consider the additional costs (purchase/sales fees, deferral tax) and calculate them. There may be the (example) per purchase/sales order of 0.50€ (or perhaps more) + deduction tax up to 27.99%. Earnings You, through the sale of shares in the month 500.00€, the state collects 27.99 deferred tax and you will then only stay 360.05€ minus the credit rate of 284.52€, you just want to stay €288.04!
ETF is a long-term investment, best for several years. Example: You invest €10,000 in 1 or 2 or 3 ETFs. On average (let's say) the 7% in the year would be discarded. But the deduction tax is also used here. (7% minus 27.99% tax = 5.0407%) At 10,000€ you get (at 5.0407%) 504.07€ net a year! If you invest your 10,000€+15,000€ credit in such ETFs, you will get (25,000€+5.0407%) 1,260.18€ interest per year. However, in the same year, €3,414.24 has to pay for the €15,000 loan. You therefore have to pay in the year €2,154.06 (in the month the €179.51)
If you invest €10,000 in ETFs (at 5.0407% net interest), at the end of the year you have €504.07 net. If you were saving €284.52 a month at the same time (the money you would pay for credit rate if you had a €15,000 credit), you would have after a year €3,414.24 + €504.07 interest, if it were €3,918.31. This money, you are investing in the ETFs now.
Thus, these ETFs now have €13,918.31 x 5.04.07% = €701.58 net interest. Capital = €13,918.31 + €701.58 interest + again €3,414.24 (which you would have paid for the installment loan) = €18,034.13 capital x 5.0407% net interest = €909.05. €18,034.13 + €909.05 + €3,414.24 = €22,357.42! The net interest again at 5.0407% = €1.126.97 interest. Then again capital + interest + savings rate loan costs = €26,898.63. We are now about in the 4th or 5th year) times net interest = 1,355.88€.
If you invest €10,000 plus €15,000 (by credit) in ETFs, you will get MORE interest in the first year! (€1,260.18 interest per year) BUT by credit you also have to pay €3,414.24 for the credit numbers!
If you are investing €10,000 in ETFs, you will get LESS interest in the first year! (€504.07 interest per year) But save €3414.24 (which you would otherwise have to pay for the loan) and invest the money, the capital and interest are increasing.
The positive thing about investing with a rat loan is: you immediately have large interest rates! The negative: You still have to pay the monthly rates! Monthly costs are incurred (comparable to electricity costs, telephone or similar) which must be paid. If something comes in, you've had bad luck. And in 5 years it can happen (possibly, maybe) times. Besides, you pay MORE back when you get.
The negative for investing without a rate loan is: you start with small interest rates that can only be increased with time and further investments! The positive: you have NO fixed additional monthly expenses and you can customize your investments! Besides, you don't pay more than you get. You are more free/flexible. If something comes in between, you can adapt significantly better.
In addition, it is enough to spend once a year saving + interest. You don't have to be active every month, but it's enough to invest ONE TIME every year, active. The rest of the time, NOT AT ALL cares about it, but just let it run!
End of part 1:
Part 2:
This saves time(!), money (pays for purchase/sales order), nerves/stress! And maybe some taxes, but that's just a spontaneous guess.*g
I hope I could help you and/or encourage you to think and/or bring you further ideas/possibilities. I would be happy!*g
Can yes (if you have time and rest) the whole examples of me to play through with an Excel file. (I always enjoy this!*gg) Of course with the inclusion of your finances (intakes/outputs/what remains the rest (although also half-year and quarterly expenses don't forget!) In order to see it itself (to get an overview), which way is best useful to you.
Bear in mind, a monthly installment loan is an ensemble, such as monthly electricity costs or rent or telephone costs or the like. For 5 years, they are then a FESTER component, the monthly costs! You can't forget that. And for any (unplanned!) additional costs, of course you should have some kind of room!
Play it through yourself, experiment calmly, also very much with new/own ideas/possibilities.
Have fun in this (originally meant and as I say) and I personally am very excited how it is ultimately (not only) implemented by you, but(!) as well as the general result (financial) has failed!*g
All good to you and you will find your right way. Tips/tricks/own experiences you have for it.*g
Buying securities on credit is a no-go. You don't.
How do you think I'm using the loan framework for the purchase of securities?