I just came across a very good property investment article titled 4 Commonly Believed Property Investment Myth.
The author starts with a vivid description of an ‘ordinary property investor’ in Singapore:
… anyone who’s holding a full-time back-breaking job, dependent on a job for income, maybe has a family to support, has some money to invest, dreams of becoming wealthy one day, and wants badly to get out of the rat race.
Does that sound like you, your friend, a relative, or a colleague?
When he talks about the first myth ‘buy and hold a property because it’s a good long-term investment’, he’s a bit sarcastic in his remarks,
I mean, it’s sure going to be a long term investment for you … if you buy at the wrong price or the wrong property.
I made the same ‘buy and hold’ mistake by not selling my properties in 2008. I could have pocketed a handsome profit and exited the market in time. But I was thinking ‘long-term’ and hoping that prices would continue to climb.
Jim Cramer said,
Amateurs are worried that they aren’t making enough, but pros are worried that they are making too much.
I was that amateur!
When the financial crisis came, I was left holding the depreciating assets with declining rental return. The author precisely points out what I lost most – the “great opportunities to invest” during the downturns.
Had I sold all my properties, I could have used the cash to buy good assets at a great price during the crash. I could buy some properties, buy undervalued stocks, buy promising commodities, buy gold and silver, buy currencies from countries rich in natural resources …
Sigh. What’s the use of crying over spilled milk?
Well, at least I learned a lesson. I sold my property portfolio in the recent boom, locked in the profit to wait for the next opportunity.
Like the author of the article, I don’t believe in the myth that ‘you must invest constantly to beat inflation’.
People lose money not by failing to beat inflation, but by investing in the wrong thing at the wrong time.
I agree with the author on investing for a positive cashflow rather than ‘hoping’ for a capital gain.
A good investment makes money for the investor on the Buy, not on the Sell.
I was always more excited when I bought an undervalue property, much more than the moment I sold it for a profit.
A good deal is: The moment you buy, you immediately know that you will make money from both immediate positive cashflow and future capital gain.
I read this article from the beginning again. A few things that the author says still echo in my head:
his “anyhow invested” property …
I call this the Buy, Hold and Pray strategy.
I rather you go buy 4D or TOTO which is a lot less expensive.
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Bubbles seems to be everywhere. Thanks to global ‘notes printing’, narrowed currency IR gaps and RMB appreciations…. Are we going to see the peak very soon ?
George Soros said this about the Boom-Bust Model, ” … when reality can no longer substain the exaggerated expectations … when people continue to play the game although they no longer believe in it. Eventually a crossover or tipping point is reached.”
Bubbles seems to be everywhere. Thanks to global ‘notes printing’, narrowed currency IR gaps and RMB appreciations…. Are we going to see the peak very soon ?
George Soros said this about the Boom-Bust Model, ” … when reality can no longer substain the exaggerated expectations … when people continue to play the game although they no longer believe in it. Eventually a crossover or tipping point is reached.”