Wait. Only buy when property bubble bursts. (updated)

I have a friend who earns very high salary. In fact amongst all my friends, I think he is ranked second highest. He knows that I love properties and he told me confidently that he is now keeping his money in FD so that when the bubble bursts, he will enter the market and buy. I said, great, so at what price would you enter? He paused and said ‘when market is low enough’. I asked, when he said low, does he mean 10% down? 20% down? 50% down? He said, ‘of course as low as possible lar’. He concluded, “Have to wait till bubble bursts before I know what price I will enter.”

I really hope when the bubble bursts this friend would really cancel his FD and enter the market because buying during crisis meant that your profit would be very high once the market recovers. From history, we have learnt that in terms of properties, except if the property is in the middle of the desert, most of the time, it will continue to go up again even if slowly. However, he has yet to make a decision as to when he would really enter the market. He does not even read about properties and said that all these news are basically telling you to buy and he will not be persuaded to buy unless the bubble bursts.

Of course, this friend of mine is already very rich and in fact will probably be very rich even if he does not enter the property market. Even leaving his money in FD would have earned him enough and his EPF is likely to be huge when he retires. The only thing I would like to reiterate is this, he could have been much richer if he has property investment. Yeah, there are risks definitely versus FD but I am willing to make a calculated one. Yes, he is ready to buy too as soon as the property bubble bursts sometime in future.

The expectations must also be set right, just like if you enter the share market, never say I want to buy when it’s low. We may want to specify and adhere to what we term as low. If we intend to sell when we already have profit, we should sell. Let’s not have the mindset of, “I will sell when the price is up to my expectations.” Yeah, of course I may be wrong. My idea of investment remains that we must go in with both our eyes open and our brain ready with some risk calculations / acceptance.

edited on 12 may 2015.

next suggested article: Switching for better investment, always.

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