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B40 needs a property as their ‘Fixed Deposit’

Posted in Starting Property Investing

Do we have RM200,000 in the bank today? If we have, can we NOT take it out and buy stuffs we like? Anyway, if we have RM200,000 in the bank today earning a fixed deposit of 4 percent per annum, when we retire 30 years later, this RM200,000 would have increased to RM663,000. By then, the amount of RM663,000 is not as much as RM663,000 of today. However, it is still going to be a significant amount which will help tremendously when money is needed. In comparison, 68 percent of EPF members 54 years old and above have less than RM50,000 and only 18 percent have between RM197,000 to RM228,000. Here’s the article in TheStar for reference: Most Malaysians cannot afford to retire. Instead of looking to save RM200,000 how about concentrating on just the 10 percent and then allowing the time / inflation take care of the rest?

Coming back to the RM200,000 example above. If we assume the B40 households could afford a RM200,000 and the government does its best to help them own such a unit; either through building more of these units and designating them accordingly or even through some forms of subsidies, we are technically helping to alleviate poverty in the future because of the lack of a property for the B40. With regards to the T20 (top 20 percent of households), M40 (Middle-Income households) and B40 (bottom 40 percent of households based on income), the typical median salaries are as per the image. What is T20, M40 and B40? Just do more Do refer to the table to understand perhaps one main reason that the government has now decided that even for affordable homes, there will be different categories for them. I think this is to ensure the right homes could be built for the right households.

How much will a B40 household have to pay for a RM200,000 home on a monthly basis? It’s actually RM912 per month. Based on their RM3,000 household income in 2016 and putting in a 5% increase for 2017 and 2018, they should be earning around RM3,307 per month beginning 2019. Thus RM912 / RM3,307 is around 27.6% of their monthly income. Whether this is doable or not depends on the household but if we could help them to somehow own just a RM200,000 property and they continue to paying for it instead of renting a home, by the end of 30 years, their ‘affordable’ home will be worth RM663,000. Seriously, I do hope the B40 do not suffer the fate of some of those working adults in advanced countries who were priced out of the market totally because of the lack of government intervention right from the beginning. Here’s that article telling how even the rental on a monthly basis is higher than their pay! Low Salary, Lots of OT and Poverty  Happy helping.

written on 15th Oct 2018

Next suggested article: Effects from a zero GST for a typical Malaysian household

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