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Investing All In Property Asset – Wise or Not?

Investing All In Property Asset – Wise or Not?

Investing All In Property Asset – Wise or Not?

Real estate is generally a great investment option. It can generate ongoing passive income and can be a good long-term investment if the value increases over time. You may even use it as a part of your overall strategy to begin building wealth.

 

Investing All In Property Asset - Wise or Not? 1

From 2016, real estate prices in Malaysia continued to decline into the fourth quarter of 2017. This downtrend also continued in 2018. The declining trend seems to be consistent with prevailing market sentiments.

Uncertainties influence market sentiment, as in the prolonged issue of oversupply of units within the domestic property market or the current trade war between the US and China. Uncertainties revolving around the tensions between the two big economic giants even seem to cause investors to shy away from Malaysia right now.

 

Pros and Cons of Property Investment?

Investing All In Property Asset - Wise or Not? 2

When you are buying a property, which may be a unit of a high-rise condominium, or a commercial shop lot, you are getting something very tangible. It is real in a sense that you can see it, touch it, smell it or even live in it.

Since a property cost a lot more than a unit of public-listed company share, you may find it hard to come up with the investment capital to even commit the down payment. But banks are more than welcome to lend you the rest of the money you need, as long as you have a stable income. Banks are not only betting on your ability to pay back the debt, they are also confident that the price of properties is stable and will appreciate over the long term. If you can’t pay back someday, banks are still able to recoup their losses by auctioning off your property.

This fact alone provides the greatest advantage of leveraging effect. You practically own a big piece of property just by paying as little as 10% of the property market value. When the property appreciates 10% in value, you are getting a 100% return on your 10% capital, based on the simple calculation of omitting all other related costs.

But at the time your investment property is not performing, as you want it to be, it is sucking money out of your pocket every month. It needs a lot of maintenance such as mortgage payment, utilities, and taxes. In other words, it would be like a cancer tumor that may get even bigger and at one point, it would threaten your financial survival.

 

Invest Wisely.

Investing All In Property Asset - Wise or Not? 3

Agensi Kaunseling dan Pengurusan Kredit (AKPK) has always stood by the principle of making prudent financial management a way of life. Remember to think about protecting your investments – no matter how busy you are in creating wealth. In planning your investment portfolio, look into these aspects: –

1. Suitable insurance policies and products that can safeguard your investments.

2. Ease of disposal during difficult times when considering the assets’ risk and return trade-off.

3. Lastly, and most importantly – diversify your investments into a few asset types, and not just rely on property in order to mitigate risks. So, even when your property investment fails, you would still have investments in other assets that may appreciate at the same time.

 

Ask yourself. Investing all in property asset – Wise or Not?

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