A close friend asked me since I love property, do I invest everything I have into property. I told her, no. It is important to understand the limitations and cons of property. When you need sudden cash, property would not be able to provide you with such a flexibility even if you are willing to sell it low. Besides that, property market is just like any other market, there are ups and downs even if on the longer term, the prices do go up. Look at JB, prices were virtually unchanged or even negative for 10 years before the current Iskandar boom. There’s no guarantee that this may not happen again.
Fixed Deposit I told her no matter how confident she is with the property market, we should diversify. A minimum of 6 months worth of our typical salary amount must be in Fixed Deposit. This gives you something real to fall back on if you do need to fall back or got fired for slapping your boss.
Insurance. Next, she must get herself well covered through insurance. If you are only covered for RM100,000, it is time to increase the amount. Go for a minimum of RM300,000 coverage. The higher the better. Touch wood but under circumstances that you are no longer around, insurance gives back something to your loved ones. Medical insurance is also necessary because it protects whatever you have at this moment and it is so cheap to buy compared to the benefits it provides.
Share market. Do not go into share market for the short term. Go into it for the long term. Buy good shares which will appreciate slowly. For example, banking stocks, good plantation companies or even cigarette companies. Come on, you may hate cigarettes but it is impossible for every smoker to stop smoking. Buy bit by bit, keep it for the long term. You will be surprised at how much you have when you look back 5 years later. ‘Sikit-sikit, lama-lama jade bukit’ juga. 🙂 Shares also allows you to get money fast if needed. You only need a few days.
Yes, then you go into property market with your eyes wide open. Read magazines. Read books. Read online articles. Perhaps even FOLLOW kopiandproperty.com. Haha. My answer is thus, no, I do not agree property is the only type of investment you should do. In fact, far from it. I bought my first property after I have worked for 5 years and I only bought one which I feel I can afford even if the conditions got worse somehow. That’s called risk management.
Conclusion is simple. Property Investment is definitely not ‘everything’.
written on 30 Jan 2014
Next suggested article: Before you do any investment, maintain your FD first