ISSUE #96 - August 2010

SELAMAT MENYAMBUT KEDATANGAN RAMADHAN

Kami di True Wealth mengucapkan selamat berpuasa kepada semua.
Semoga Ramadhan kali ini membawa seribu makna dalam hidup anda.

Why I Invest in Properties

There are a myriad of investment vehicles for the Malaysian public today. While the choices before were just shares, unit trusts and properties, the investment choices have exploded in recent years. For starters, there are over 500 different unit trust funds today. These include Islamic based Funds and Sector Specific funds. Even banking products have developed from the plain vanilla savings and current account. Maybank alone has 11 different types of consumer deposit products, which include Individual Foreign Currency Account. Also, futures, options and even online investments have arrived in Malaysia. In other words, the Malaysian public has a world of investment choices today.

While this is obviously a good thing, it can also create its own problems. The sheer number of unit trust funds alone can drown the individual investor. How do we choose from over 500 different funds? And that is just for unit trust funds. What about savings accounts, current accounts and housing loans, for example?

Further, all these investments each have their own strengths and weakness. As we all know, there is no such thing as a perfect investment. So in order to gain one thing, you have to give up another. And in the world of investments, to get a high return, you have to take a lot of risks. If you cannot fathom a lot of risks, then the answer is that you have to give up on high return investment. By the way, this is nothing to be ashamed about. I myself cannot and do not take high risks. This is why I do not invest in futures or options or currencies. The wild price swings and the massive volatility will just send my heart on overdrive. So I stick to being slow and steady.

Next, in order to make money from a particular investment, you have to learn about it first. What is the investment, how it works, the supply, the demand, etc? While it is true you can make money even if you do not know anything about it (termed as dumb ass luck), you can only do so consistently by knowing as much as you can about the investment. Here lies the problem; if you wanted to learn about all the different investments out there, you will be spending your whole life learning about them, and not have time to make money!

So, to sum up the better investment strategy: learn about the different investments, choose one or two that hold the most promise, and then concentrate your resources on them. And only them.

In case some people get the idea that the strategy is good in theory only, I can vouch that this is the actual strategy that I use myself.

Like most people, I too wanted to become rich. Although big money is generated in running your own business, I had to count that out as I love my job and love doing it. This meant that I had to make my money through investments. As I had limited time, I had to choose an investment that fulfilled certain criteria’s:

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Gave a decent return (above inflation rate)
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Required minimal work on my part
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Required minimal time
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Financed by other people’s money
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Within my control
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Have acceptable risk
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Gave tax relief
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Gave peace of mind

Now I know that the list may look terrifying and overwhelming to some people, but hey, I’m difficult to please. So damn the torpedoes, I went around looking at a few different investments.

One of the first ones that I looked at was share markets. (No surprises there.) The share market gets all the headlines and all the glory. So, after doing some reading and research, I dabbled in shares. Again, unlike most people, I made a little bit of money and I lost a lot of money. This was after doing a lot of research!

Furthermore, shares, while being an excellent investment, did not fulfill my idea of the perfect investment. They required too much of my own money and worse, is out of my control. One day the prices are up and the next day they are down. Some funky old guy in a different country dies and the stock will go down. Oil prices go up and it goes up. I certainly could not control it (and neither can anyone else for that matter).

So that counted shares out.

The next obvious investments were mutual funds and unit trusts. But, as a significant portion of monies is invested in the share market, the same drawback applies to mutual funds and unit trusts – the return is out of your control. It dawned on me that perhaps shares, unit trusts and mutual funds were not the next big thing for me.

I knew enough about futures, options and commodities. I knew enough to stay away from them!

Ditto with currency trading. The powerful currency traders can bulldoze over a whole country. Now, if a whole country can fall apart because of currency trading, what chance do I, as an individual investor with little money and limited knowledge have? Zero is too big a word here.

Right about this time, someone mentioned property investment. “Hey, that’s an idea.” I remember thinking to myself. So, I started researching about properties. I read books, magazines and asked a lot of questions. And suddenly a whole new world opened before my eyes. I saw properties in a different light. And while it did not happen overnight, my views did change.

I discovered that properties met all my requirements of the perfect investment. It gave a decent return (above the inflation rate), it did not require too much work or time, it had minimal risks, it could be financed by other people’s money and best of all, I was in control.

What do you know? I was spending time, effort and money searching for the perfect investment when I was actually living in one all the time!

So, that was then. I must add that much water have flowed under the bridge since that fateful day many years ago. I’ve bought properties, rented them, sold them. I’ve had problematic tenants, paid much money to the banks that loaned me the money to buy the properties in the first place, and even paid my taxes religiously. Of course I made some mistakes along the way as well; we live and learn. The only similarity is that I’ve made money from all the properties.

Isn’t that a good reason to invest in properties?

Now that you know why I invest in property, you will be happy to know that I will be conducting my popular and #1 property seminar in Malaysia where I will elaborate on more errors that investors make and of course, their solutions. Further, I will also share strategies that will protect you from possible downturns in the market so you will sail on smoothly regardless of the economy. For those who are unprepared, naive or greedy, they will suffer much pain when the upheaval begins. A lot of people will be unable to repay their mortgages and many of them will lose their money and also properties. I will guide you on what to do to protect yourself and yes, on how you can benefit and make huge profits from the fall.

As mentioned earlier, the more you know about property investment, the higher are your chances of making money from the investment. You will increase your profits, reduce your work and more importantly, reduce your errors drastically.

When you consider that the cheapest property in Malaysia now is RM100,000, isn’t it worth investing a little bit of money to learn how to do it right? Remember that the knowledge will stay with you for life!

Copyright © Azizi Ali 2010

“Money is the root of all excellence.”

* Louis E. Bejarano *

QUESTION:

Not too long ago, I came across your book entitled How to become a Millionaire Landlord. After reading it, a spark lit the fire to my quest for knowledge about the world of finance and earning money. I soon bought another book of yours, Millionaires are From a Different Planet. This book has educated me on personal finance.

After reading your profile, I was very much encouraged, not just by your success in personal finances, but also that you are a pilot. You have become my role model. What I understand from your profile is that you are a pilot; already have an MBA from University of Bath, and most of all, in control of your finance.

What I am particularly interested is how you did all that?

ANSWER:

Invest in yourself by reading more books, attending talks and seminars or even formal courses. The best investment we can make in our lives is in ourselves. It will make you more money than any other investment.

And oh ya, the knowledge stays with you for life, and it’s also portable (it goes wherever you go)!

P.S.: I read three books a week.

* HOT TIP *

Read 40 Questions You Should Ask Your Lawyer Before Buying A Residential Property In Malaysia by Khairul Anuar