Personal Finance 101: We should aim at minimum of RM600,000 if our intention is not to own any property
If anyone tells you to skip property investment totally…
These days, there are many personal finance experts in the market. Some do video, some write and somehow for many of them, their advice is always to skip property investment. Erm… Let me tell you this fact yeah. If someone says they are a personal finance expert and are giving personal finance advice about all other investments except for property investment, then it’s important to note the numbers below which will without any doubt affect anyone without a property of their own.
I assume the personal finance expert already own their own home, that’s why they think it’s no longer important. They may have forgotten that many of their readers still do not yet own a single property. Maybe better to be more responsible and tell the full story and not just the narrow perspective one which is ‘property investment is too slow… etc’
Simple calculation and yet it’s a compulsory one
Anyone without a property MUST be ready with the amount because this following number is non-negotiable yeah. No one in Malaysia, including myself and you would like to just sleep under the sky every evening yeah. We would need a roof over our head, somehow. If not our home, then someone else’s home. Calculation for that amount of RM600,000.
Rental (RM2,000 per month) x 12 (months) x 25 (years) is equal to RM600,000
This is the amount everyone needs to have prepared if they are to stop working at 55, does not own any property they could stay in and thus have to rent and they live to 80 years of age. We also assume the landlord is a super nice person and does not increase the rental for 25 years or forever and ever.
More assumptions that all other expenses are also negligible
We also assume electricity bill is negligible, we assume food and drink cost are negligible, we assume internet is free at that time, we assume this person does not need to watch TV, does not own a car and thus no need to pump petrol and we assume this person hates holidays and just want to stay home. That’s why this person only needs RM600,000 and nothing more.
This is why at least one property should be the right recommendation
This RM600,000 (or more) is the sole reason why everyone should have at least 1 property which they could call their own. Please feel free to google for property investment and property prices. Regardless of whether developed countries or countries where the government is able to provide cheap housing or even countries where the people are earning a high salary, a property is always needed and property prices always go up too.
This is why it’s a natural hedge against inflation yeah. Plus, renting a good place at a good rental is a great thing but renting is forever. That’s how generations after generations, some families remain very rich due to real estate and some families remain poor also because of real estate. Perhaps one day, everyone will stay inside their car instead, which could expand to become a house when needed and then transform back into a car. Then, I think we no longer need property. Just buy a car.
Happy earning more than enough from all other investments to skip property investment totally. Else, just get one small one. It’s fine too.
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