Planning and Investing for you and your family

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This article first appeared in January 2015 Edition of Ivory Living.

When I learnt that my wife was pregnant with our second baby, I was ecstatic! I told her that we must do the same for the new baby as per what we have given our first baby. We must plan for their future. There would be a time when our children would be old enough to start their Degree, either locally or overseas. That’s when a HUGE SACK of money is needed. We can save for them. So, how much should we save? RM500,000 should be a safe number if it is for overseas studies, except for a Medical Degree.

Saving is a virtue everyone must save. Saving for the rainy days. Saving for unforeseen circumstances. Saving for a future purchases. However, when we already have an idea of what we need, we should be slightly more pro-active and use the investment instruments that we have today. Let’s talk about property investment, focusing on only three points as below.

It’s risky. Honestly, is it risky to buy or riskier not to buy? Risky to buy high-rise or riskier to buy landed. The questions are never ending. Truth is, no one can decide for us. If we buy a condominium today, the plus point is we can rent it out. Yes, it’s true, if we buy in Penang, the rental return is like non-existent and we would not be able to cover our mortgage. However, always remember that even for a RM500,000 condo today, based on the usual inflation rate, by the time our child needs the RM500,000 our property would most probably be fully paid and we can sell your property for much more than RM500,000 during that time. If we buy landed, we would need more capital but always remember this, ‘you cannot grow land’. Yes, we can argue that reclamation is possible but honestly, even today, can we afford to buy those properties built on reclaimed lands? If you can easily afford them, you do not need to save anymore. ☺

Bubble is bursting / Crisis is coming. If we are able to predict this, we are amazing. Until today, no one can. That’s why it’s called a crisis. If not, everyone would already be ready for it when it comes and it would never be called a crisis. When we cannot predict, then why not take steps to mitigate this potential risk? During bad times, people will downgrade to smaller cars and houses but when recovery starts, housing will always be popular. That’s why home is always ‘home sweet home’ or ‘home is where the heart is’ or ‘what is family without a home?’ If we understand this, then we would know that buying a good property meant sooner or later someone would offer us much higher prices for it in the future because they somehow would need one.

I don’t know what to buy. If we seriously think property investing is easy to earn quick money, then we are just lucky. Property investment needs us to read more, listen more, understand more and invest time and effort. The best part is, once we have done this, the chances of success is quite high. This is not a gamble where we look at the odds and plus a bit of luck and we place our bets and we hope. If we do not know much, then we are gambling. When we know more, it’s called investment. Of course, with any type of investments, there are always risks. Manage them, that’s all.

Property will always be needed. Look at the number of new baby shops today as well as rows and rows of baby products in departmental stores. Read about the statistics of the number of homes being built versus the number of homes needed. Read about the continuous rate of urbanization from smaller towns, villages to bigger cities. Read about the fact that house prices would continue to rise because no one can stop the land, material and labour costs from not increasing. Take action. The best time to buy might have been 20 years ago. Most of us would have missed it. The second best time may be today. Happy investing.

written on 11 Feb 2015

Next suggested article: Next 5 years, better invest in Malaysia – Fortune.

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