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Would you buy if the interest rate is 14%?

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When I bought a condo in a not-so-popular area in Penang, I was asked again and again why I did not buy in more popular areas. Answer was a simple one, I could not afford those popular areas. I was only 29 then and I did not earn RM26,000 per month… 🙂 This same question and answer would come up again and again in my investment journey and it took many years for these friends to realise that they should have bought that same property as me because the capital appreciation has happened. This is what I call, missed opportunity but for those who missed it, it’s called regret.

I also always hear people regretting not buying a property earlier. “NOW, the property price is so expensive already, how to buy?” Those people who bought much earlier were lucky. When I asked how earlier do they mean, no one could give an answer. It’s just ‘earlier loh…’ Well, their answer shows as if there’s no tomorrow and no future to the property demand here in Malaysia. Okay, let’s take a year then, how about 1984? Or perhaps 1998? Okay, the interest rate payable if we were to get a home loan in 1984 was 14 percent. Yes, please read it again. 14 percent. Image on the left. I happened to see it today in a loan agreement. Here’s that historical chat in CEIC.

The question now is, “Would you buy a property then? Would we even DARE to buy?” Versus today, it’s about 4.5 percent for a typical home loan. Come on, every period presents different opportunities. The question we should have in our mind is, are we investing or are we gambling. One needs TIME, another needs LUCK. What happens with time is that inflation will always be around, so prices will adjust upwards accordingly. That’s why investments are usually to hedge against inflation. Please do not keep our cash under the pillow… It earns nothing and we keep losing more of its value. What happens with LUCK is that when we are lucky, we win big, when we are not, that’s the end of the road.

Advice for 2019? Read more, understand more. Buying or not is another matter altogether. Then, start investing. Start small, that’s the best. Living without regrets? It’s really possible because these days, information is readily available. We like to compare two different areas? It could be done. We like to know what’s the transaction price? It’s possible. We like to know when was the launch for one particular property? It’s in google… If we still think and do the same as people in 1998 when we are now in 2019, we will surely regret when we reach 2029. Happy understanding.

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<Featured Image is courtesy of Stock Photos from kenary820>

Article written and edited by Charles. News article summarised by Dina Batrisyia.

written on 3 April 2019

Next suggested article: If interest rates keep going up, how long could we keep up?

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