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Why buy and why not to buy for stocks (shares).

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Many people say that this is not the time for property investment. Plus the fact that it requires such a huge downpayment amount, not many could afford property investment. I think we missed the point. If we truly think of property as an investment, then who focus on current? Why not look back into history for lessons and look into future for potential (simply due to inflation for example). Anyway, since everyone is always comparing the stock market (which is now pretty active) to the property market (which is starting to be active), then let’s look at some of the pros and cons of investing into the stock market. I repeat, investment into the stock market. I did not say buy now, sell few seconds later. That’s BUY. Here’s that earlier article for reading if you like to know my meaning for investment.

The Pros for stocks.

#1 Buying and Selling can be within the same minute actually. Thus, there is no need to wait for the property price which will take weeks, months and years and even then selling it and getting back our money and the profits will take months… In other words, the stock market is highly liquid and when you need money, you can change the stock into cash within days at most.

#2 Diversification can easily be done. We could own some shares in a bank, in a glove manufacturer, in a high technology company and even a mineral water producer. Entry cost is usually very affordable and RM10,000 may be more than enough to diversify into a few different industries. It’s impossible to diversify easily when it comes to property yeah. Just buying one property would mean many years of savings before we could purchase the next property.

#3 No stamp duty, lawyers fee yeah. Typical fees to trade stocks? Very low! Take a look at the image: (As low as Rm7 per transaction yeah). Source: imoney.my

Ready to jump into the stock market? Read the cons too yeah.

The Cons for stocks.

#1 Prices can move VERY FAST (High Volatility). While this is good if the price is up, it’s also bad when it’s coming down. In other words, it may be nerve wrecking for many people especially if the price kept dropping right after we have bought it. It will cause many sleepless nights. However, there are people who prefers to invest in some stable counters for continuous dividends.

#2 Due Diligence would be harder to do. It is not often that we would drive to the manufacturing plant which shares we bought. However, if we are evaluating a property, it’s possible to drive around the neighbourhood and even to view the actual unit if it’s a secondary property. Many counters do not reach their potential because of the management team. It will be very hard to do due diligence on the management team except from reading their profiles.

Yes, I love the stock market and continue to buy whenever I see opportunities. I think this may not yet be the best time to sell. At the same time, I also trust the unit trust agents and have invested into Stashaway.com too. Follow me if you like yeah. To me every investment would have its pros and cons. We just need to understand them so that our decisions are made objectively and not emotionally. Cheers.

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Next suggested article: Timing and attractiveness of property investment always a favourite question

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