What is our financial goal, really?
Long time ago, millionaires were the focus of many. Everyone would look at becoming a millionaire. These days, depending on the currency you are earning (means in some foreign country), you may already be a millionaire in Malaysia if you exchanged all your savings for the last few years of working and saving back into RM. Thus, these days, many start to say that the focus should be how to become a billionaire instead. Actually, it’s great to have great goals BUT perhaps some milestones would be good.
How do I complete marathons?
I have completed two full marathons and many half marathons thus far. In every race, I barely hit the qualifying time to get the completion medal and T-shirt. Truth is, in every race, my goal is to complete the race ON TIME and it’s never to keep up with even the top 50% of all runners. This is the same principle I apply in the property investment world. There are already those who are very successful, probably owning 50 properties or more? Those are not my target and I have no urge to rush and join them or even thinking that some day I could become one of them. One word for me? Impossible.
Is one property after another so bad then?
Stay focused. Save enough for that first property. (I did this was back in 2002) Stay in there for a few years, rent out one or two rooms if desired for extra financial support to your monthly mortgage. After doing this for many years you would realize you have enough money for an upgrade, better and bigger home. (I managed to do this in 2007)
Sell the first property for your capital appreciation or continue renting this one out for continuous rental income. Both ways work just fine. You have now two properties. Else, for the next upgrade which is the 3rd property, maybe we could sell the second property if the second property has appreciated more than the 1st property? (I sold my second property in 2012). By selling, we get capital for us to continue our property investment journey too.
There’s NO need to achieve anything close to 50
If you are 30 or older and is in the corporate world as a professional, it’s too late and very impossible to achieve that 50 property goal by 65 years old but it’s possible to aim at having 4 properties which are fully paid. Example?
30 years old – 1st property (probably this is that property which you rented out fully furnished since you upgraded)
37 years old – 2nd property (probably this is your upgrade home)
44 years old – 3rd property (probably bought this with huge downpayment from your capital gains in 1st or second property)
50 years old – 4th property (small unitlah… you do not need so big anymore… go travel when you reach 60 and perhaps rent it out via short-term rental when you are travelling!)
Please do note that the above is a SUPER SIMPLE example which may or may not happen but numerically, it’s way more possible versus trying to become a billionaire and that involves taking super high risks. If that’s your aim; a billionaire then please do skip this article. It’s too slow for you.
What happens at the end, when you stop working?
By the end of the mortgage which is 30 years later, probably all these properties have just appreciated following the inflation rate. So, you did not gain too much but suffice to say, probability of it being RM500,000 per unit on average is definitely there. Yea, 30 years later is 2051. By then the value of RM500,000 would be way lower than RM500,000 today. So, the question is, if you do not buy a property, you think you can save RM500,000 in cash by then? If the answer is yes, then by all means go ahead. Do not bother about property.
Is property the only way?
Answer is a firm NO. We could also save via FD… we could also save via Unit Trust… we could also buy stocks and wait for dividends and there are a lot more other types of investments too. Property is just one of it. The best question is this, ‘Have we started on ANYTHING at all?’ If the answer is not yet, then property can always be a good forced start. If we do enough study, it will not be a FALSE start.
Happy understanding that becoming that billionaire is not the goal for most of us. Perhaps that journey towards 4 properties could be a better journey? It is a choice you would have to make. Happy investing.
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