Which to invest? TPC – Practice Q1


Better invest in property, unit trust, stock market or saving account?


They are vehicles of investment. It depends on your risk appetite as well as the quantum of money involved.

Commonly, most people would have some saving at all times. May be some money in Unit Trust, one or two blue chip shares, and some instalment on property. The risk involved are different.

Property is almost zero risk. A property going terbengkalai nowadays is quite rare. HDA (the law) has become strict that a developer cannot get approval without adhering to rules and regulations which safeguard the rights of homebuyers.

The risk appetite is however different. Rather, as people buy into property beyond their budget, it sometimes can be a major pitfall. So, despite the property is completed ahead of time (thumbs up to developer), the property becomes a liability rather than an asset. Simply put, it can be too expensive to sustain. So, such risk is not without a reason.

Indeed, it is NOT about property itself, but the risk appetite and greed of the buyer/investor. Some buyers are flippers. Hoping to resale the property when it is completed. As the market goes under, the demand for property is reduced. Hence, many are left with loan installment of RM3,000 when the property is renting only at RM2,000 or less. Price earning ratio in such case is really depressing. Property is not liquid, you take time to sell.

The market is inefficient, and you would not know the pricing well. It is not like stock market which gives you periodical updates. Developers do not share their pricing structures to outsiders. Such is the matter that property is not like unit trust, stock market or other financial instrument, it is very inefficient. Information on property is many times outdated, and decision making is kind of “gut feeling”.

In short, investment in property, although is relatively less risky, it is capped with the caveat that you need to be aware of your budget. Never wear a cap too big a size!