Ms_EasyVestor 🦋

Should You Accelerate Your Bond Repayment or Invest in the Stock Market? Let me give you a case study. Consider a home loan of N$1.5 million. If your own loan is larger or smaller, the same principles apply and you can scale the figures accordingly. Assume the loan is repaid over 30 years, or 360 months, at an interest rate of 11%, which reflects where most Namibian home loans currently sit. On these terms, the monthly repayment amounts to approximately N$14 285. Over the full term, the total amount repaid reaches roughly N$5.1 million. This means that around N$3.6 million of that sum represents interest alone, paid to the bank over and above the value of the property itself. Now consider the effect of a modest additional payment. By contributing an extra N$1 000 each month, the repayment rises from N$14 285 to N$15 285. The repayment term falls from 30 years to 21 years. Total interest paid declines from approximately N$3.6 million to roughly N$2.35 million. In other words, a single additional payment of N$1 000 per month saves close to N$1.3 million in interest and allows you to own your home outright nine years ahead of schedule. Repaying an 11% loan delivers a guaranteed 11% return, tax free and without risk. To outperform that in the market, your investments would need to earn consistently more than 11% after fees and tax. This is achievable over the long term but never guaranteed in any given year. The bond offers certainty, while the market offers the potential for greater returns accompanied by volatility along the way. For most people, the most sensible approach is not a choice between the two. By accelerating the bond and investing at the same time, you can work toward a fully paid home and a growing investment portfolio in parallel. For educational purposes only, not financial advice.