Friday, September 19, 2008

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Property Investment is Best Long Term Investment?

The following is a forum exchange on property investment as the best long term investment:

"Nowadays not many investment options. FD - rates too low Stocks - going down all the way. Money market and structured product - can you trust them? Commodities - going down because hedge funds are selling. So property is best - noone can short your physical property, can collect rent and price stable and slowly going up Spore's property is best long term investment."

"Buying property NOW is the fastest way to commit suicide."

"you are out of touch...dont buy expensive new properties. look for cheap RESALE properties and buy only if you can afford it... shares and structured products - suicide if you are not financially intelligent"

"Wrong! New property price go down, resale property also go down. Just wait for the Great Singapore Sale. Cheap old private properties will get even cheaper. Right! Stay away from financial and structured stocks. Also stay away from property stocks. Wait for another fear-grip day like yesterday to buy stocks. Fact: Good stocks always go up within 5 yrs and always go up faster than property price.

Diversify. Don't always property, property.. Singapore private property makes lousy investment .. most are 99LH consumption good, not investment... Keep your HDB flat for long term property investment is a wiser and lower risk choice. "

Extracted from the Singapore Property Forum

May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase


Phantasia said...

Hi Smartbuyer,

Would like to seek your views again regarding mortgage loans. Generally is it usually a good idea to stretch a home loan as long as possible?

Recently i was also offered a 3-month sibor package where the monthly installments are fixed, but the principal paid varies with the interest rate.

I think it sounds like a good package as there is some certainty in the amt of monthly installments paid, but any potential pitfalls from this? And the equity accumulation is quite slow due to the length of loan.


Smart Buyer said...

Hi Phantasia,
Smart Buyer here is next to an idiot when it comes to home loans. I'll forward your question to a mortgage consultant and will get back to you as soon as I've got some useful info.


Novice Investor said...

Dear Smart Buyer,
Do you think stocks make better investment than property?

Smart Buyer said...

Dear Novice Investor,
When asked which categories of business to invest, Warren Buffett (yes, I'm a Buffett fan) said, "For me, it's what's available at the time. We're not inter­ested in categories per se. We're interested in value".

Invest in whatever gives you good value. At this point, property price is high by any standard. Stocks were good bargains just 2 days ago. When there's no good-value investment around, then don't invest.

Anonymous said...

Installment per month is $1,000

Years 25 20 15
Interest25 20 15
1000 250 200 150

Longer the years of loan, more of your installment is used to pay interest to the bank.
Unless you can afford to pay the higher installment, pls try to save your money by having a short loan period.
There are circumstances that buyer takes on low installment first while waiting for the home to be sold.
Pls look into the numbers of years that you can use a lumpsum payment to lower the loan amount and hence the loan period.

There is a penalty period to watch out.

Phantasia said...

Hi Anonymous,

I do understand that the longer the loan tenure, the higher the interest that you're paying.

But i'm kindof divided whether it is better to use the money to put into other investments...or to pay off part of the mortgage loan and hence reduce the interest payments. Also taking into consideration that a home loan is usually considered "cheaper" to borrow as its interest rate is generally lower.

Smart Buyer said...

Dear Phantasia,
You would expect to hear this from me (a self-declared prudent investor), "Leveraging is very risky".

Remember always, only invest with money you can afford to lose.

Best wishes

Phantasia said...

Dear Smartbuyer,

Thanks for the reminder. And I do agree with you, that prudence and caution is most important.

Remembered watching a dialogue by Warren Buffett, where he mentioned how some investors risk what they need for things that they don't need. Ultimately letting greed take over and losing everything.

Smart Buyer said...

Well said, Phantasia.

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Dear visitors:
Your comments are most welcome!

The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

Smart Buyer :)