A very pertinent point converting property fr long term to a liquid investment - mortgage refinancing

Gosh, I only have one kid. If I ever have an additional one, it will be back to the drawing board for me. Planning is the key to success.

Xuzen

If only one kid, must be risky for your old age.

How so?

Xuzen

Your method is protection by saving method, why dont you create investment by self regenerating.

What does investment by self regenerating. mean?

Xuzen

Old school - Investment in property (if you acquired the correct one).
Like what I have mention earlier.

Normally the property that you buy, you have to buy MRTA or equivalent. if anything happen to you the property will be fully paid.
your family will be protected from liability + they get the rental income for basic necessity. The best thing is that you could finance the MRTA,
your insurance is paid by your tenant too.

Half way thru, if you need money, refinance it again and the whole process restart.

You only need to buy medical & PA for yourself + family. Maybe some life insurance without investment value attached to it.

Invest in blue chip with high dividend yield.

yes, education insurance is a good one since your baby jst new born and get a lets say 20yrs plan would be enuf for his/her uni fees by that time.

That's the major problem for a lot of people.

Also not every property can have good rental income. Some may facing tenants problem as well as rental collecting issue, which is not uncommon.

Property investment is good, if acquired the correct one.

We are now in low interest environment so refinance seems ok generally as for the last decade we haven't see spike in interest rate which people nowadays has been a bit complacency on refinance issue as we have not a property market crash since decade back at least locally. Previously US people has been hurt a lot due to refinance to 'liquid' or borrowing more money after property price boom.

When everything is ok, refinance is easy. But when something wrong, just like last year end, and beginning of this year, when bank tighten the lending practice, a lot of properties company went burst because cannot get refinancing.

Don't mean property investment is not good, in fact, my view, properties investment is one of a few good investment target (if and for the right properties), just raise some risk on properties investment which people should be aware of.
Not every properties investment turns out to be good one. We have seen lot of shoplot being abandoned due to lack of demand, properties developers abandon the project, or large number of case, properties price increment or net rental income is just comparable to what FD or bond is giving only.

There is some sort of funds/bonds/insurance package that includes insurance, and when the kid is 18 years old he/she will receive certain amount of money. The interest rate is much higher than saving in banks.

I also heard about this but so far cant google much info bout this.. most of the time we have to setup a meeting with their agent and this sometimes makes me wonder what's up with all the secrecy Is there something to hide? coz I really dunwan to waste my team hearing some sales agent trying to sweet talk me over some product...

This post has been edited by awiekupo: Sep 19 2009, 11:47 AM

There are lot of education insurance/plan out here.
But please remember there are clauses and commitment need to be made, which one should be clear of before committing.

Often a handful of agents (definitely not all) only tell the beauty story of it, but don't disclose potential issue if things are not happening as what had predicted. No offence to those agents, there are still a lot of sincere agent out there.

What actually people want is not the sweet part of the product but the whole picture of it. Whatever plan/investment, be sure about it, risk is always associated with any investment plan.

Cheers.

exactly cherroy.. totally agree with u.. most of the time they like to divert from the potential issue..

Liquidity is not borrowing.
1) Dont borrow if you do not have a plan on repayment.
2) Borrow for investment not for luxury.

If Property market crash.
1) Unless you want to sell your properties, or else no financial impact.
2) Rental income may drop, but i doubt so if its at good location (urbanised), I am much more concern with high umemployment rate and general economy condition.

Bank is just like any other company, profit motivated.
1) If the bank dont give loan and etc, they will not have profits.
2) With profitability as an objective, they have to give as much bank loan as possible to whoever qualified (tier 1 customer).
3) If the bank wants profit and dont want risk. How can we fullfill it? Give them security..but dont give them FD unless in return they give more than 1x of your FD.
4) Ask bank what sort of security they want...high chances, their first answer is "do you have any properties".

Yes, there are tons of this kind of package available. Interest rate is higher than FD, then way above saving interest.
Just that how many people basically willing to "stuck" a sum of money for so many years?

It will be good for those who are not discipline enough, who may "tangan gatal" and touch the education fund for other purpose (end up nothing for their children in the future).

Basically most of the insurance package (endowment plan more likely to be the name for it), may double the premium paid at year 20. Is it a lot? I have no comment.

If you have better investment vehicle available, please use that.
Else, can consider insurance package (non-investment link, traditional package I'm talking about, I think basically risk free? Just a matter of variable in term of dividend.)

About funds and bonds, I would glad if anyone can share with us about that.
I would say for education fund, should go for risk free plan (something like FD perhaps ?)

That's true.

Couldn't agree more.

Working with my father now, under his company.
Been chatting with the workers, some of them basically every month money in, every month clear.

Is forced saving good for them?

Do check our lovely garage sales, its funny to see when someone sell their stuff because need to pay tuition fee, house loan, etc. What a joke!

If one could control or manage their cashflow or expenses properly...direct investment is the best..

What do you mean by the location is correct?
Can you elaborate more on this?
Maybe by giving some examples...
Thanks..

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Added on September 20, 2009, 11:20 amActually there are ways to save and bargain in every aspects of our life. From cars, music, investments, phones, clothing, etc...
We just need to get the information about it.
And that what should you focus to.

This post has been edited by Bizmind: Sep 20 2009, 11:20 AM

Firstly, congratulations on being a father.

Glad to know you planning for you child future. After reading your posts, I would like to comment as follows:

1. Differentiate between your baby's money and yours. Money given by you or others over the years to your baby's is her money. My suggestion is just go put the sum accumulated up to date into FD with her name (i.e. Joint) and whatever money she receives into a Child Savings Account (eg. HLB where the interest is higher than normal savings account) and then top up into the FD yearly.

2. Your own money you invest in whatever instrument with the intention to use it for her future needs is yours. In this senario I agree with Dreamer. Please note that all investment have risks.

3. You want maximum profit, go start reading investment books and read the threads in this section (on insurance, gold, unit trusts, FD, FOREX etc) and the stocks/share market section (on dividen paying stocks. etc). Property is not liquid and does not fit into criteria stated by you.

xuzen, I must thank you for posting above, especially the SSPN RM3K tax deductable, never occurred to me when I filled my Borang B this year. Going to open an account before year end and get tax rebate. Just to add, your Med-Card for your child is Edu Plan? Can get tax-rebate too for Edu Plan.

Haha, for LV, Sg. Wang got alot cheap cheap and nowadays kopitiam also got free wi-fi

This post has been edited by Gen-X: Sep 20 2009, 12:10 PM