I am poor, so I buy an ‘affordable’ home

A friend who’s just starting his corporate career climb once told me that the reason why he was buying an affordable home was because he was poor. Well, in Malaysia, there are still Nearly one million civil servants without a home . Besides that, with a typical starting pay of lower than RM2,500 per month and perhaps rising to RM3,500 in 5 years with typical increments or RM4,500 with excellent performance and promotion, not many are going to be able to afford anything in the hotspots yet. For example, inside PJ? It’s not just whether they could afford the monthly mortgage but it’s more of saving enough as downpayment. A RM500,000 home would need RM50,000 as downpayment. That’s RM10,000 of savings per year or close to RM1,000 savings per month, out of the whole month’s net salary. Yea, actually, not many could do so, unless they have the support from the PA MA bank. (parents lah).

When we look at my friend who is buying the RM250,000 apartment, he has to save at least RM25,000 in 5 years or RM5,000 per year or RM450 per month. After getting his pay balance every month, RM450 is easily 20 percent or more of his pay. At the same time, he would still have to pay for his car, fuel, handphone, broadband, Starbucks and more (including the other half). I think it is certainly safe to conclude that this young friend of mine is rich enough among all his peers. Generally, very few of these fresh graduates who has worked for 5 years would be able to afford even a RM250,000 property. Let’s not talk about the days when landed properties were once RM250,000. My conclusion is very simple, within the same group of people, this friend is already rich. Due to this, within the next 5 years, as long as he is still doing the same 20-30 percent savings, he will most likely start his property investment journey already. Even two properties by the time we retire is better than one property…. right?

The statement of “I am poor, so I buy affordable home’ is far from the truth. We can be poor in many ways. Poor in financial knowledge is usually the leading cause to poor in financial resources. Poor in financial resources is usually the cause contributing to poor in terms of available investment opportunities. When we are poor with available investment opportunities and somehow we do not run out of this vicious cycle, I think that is when we can safely conclude that we are poor, in everything actually. There are many people, many examples of people who had very little. They have a vision, they saved enough and pursue that and well, they stop being poor. If you are a fresh graduate today, please stop whining about being poor and just save enough for that affordable property. You are not poor because you bought that property. Enjoy working!

written on 9 Oct 2017

Next suggested article: Crisis or no crisis, salary growth will lag because….

 

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4 thoughts on “I am poor, so I buy an ‘affordable’ home

  1. Hi Charles

    Great write-up to serve as encouragement to the Malaysian millennials. The young certainly deserves good advice, especially the ones starting out without a good lift from PA MA. There are also those who still need to pay Uni loans, supporting parents and siblings. Over and above all these, they need to save up for marriage, home and other life-situations only the individuals know. Then after ‘settling down’, there is fatherly duty? It is tough to be in this stage of life. I can truly empathize.

    To all the young who have nothing, don’t despair, just work hard and stay focus and save and invest prudently. You can own many houses or business.

    Today, as I type this, my wife and I are in Europe for a long holiday in our retirement. God is great.

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