Personally, I define investment as something which I could UNDERSTAND why I could get the returns. If it’s something which I do not understand, then it’s just a purchase with potential returns somehow, it’s just not an investment. For unit trust, I am able to know the stocks which the fund manager is buying into. I may not know the companies enough but I guess I have to trust the fund manager. I know that when these stocks do well, then my fund does well and I will get good returns. When these stocks fare badly, then I suffer losses. The profits from the unit trust will need to deduct relevant fees. I have invested into a number of unit trust brands but recently I invested into this one which has minimal management fee. Read here.
If it’s a share of a company listed in BURSA, then I must understand what the business is about! For example, we buy a hotel stock, then please drop by that hotel and see if it’s fully booked. If we buy into a car company, then start looking at car sales charts, are they selling ever more cars or fewer cars? However, if we are buying into a company which business model is something we are not familiar, then it’s no longer investing yeah. It’s called speculating. This is why even the stock market can be an investment or a gamble, depending on how we do it.
If it’s property investment, then it’s a save-enough-downpayment and qualify for a bank loan kind. Property investment has nothing to do with any get-rich-quick scheme. Buy this year, sell for big profits next year for example. Anyone trying to sell you a property and tell you that the price sure go up next year is most probably going to run away with your money. The only two reasons why you will believe him is because you are ignorant and greedy.
My parents bought their first property in Teluk Intan for RM35,000. That was in the 80s. The same house is now priced 10 times higher. They bought their second property in Ipoh for RM85,000. That was in the 90s. It is now RM540,000. Over a long period of time, due to effects of inflation (money getting smaller in ALL countries) and salary amount going higher, the property prices will just follow. So, to all the personal finance people out there, please be objective to all investments. While property investment is not for everyone because of a high barrier to entry; downpayment, it is definitely NOT a so-called low risk, low return kind of investment. Cheers.
written on 21 Aug 2019
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