Property investment is different 'game' with secured saving, like FD or educational insurance.

Property investment is a liability as one took up housing loan to buy the property, unless one is paying in full cash.

There is no guarantee property investment must be making money (net with more than FD rate), nor the property is liquid when you want the cash time.

There is no guarantee one will be getting tenant or good tenants as well.

Don't mean property investment is not good but there are more variable risk involved.
It should be treat as investment as buying house using housing loan actually is a leveraged investment and you are commiting to the monthly payment of the loan which is a liability, not a pure saving.

You should ask yourself, can you withstand if the money invested turn out losing one?

If no, UT and gold is not an option.

Save the money in your saving/FD account is sufficient for near term. Your child still a baby, should be looking around what option you have and your financial situation, before commiting to anything.
Do not commit anything before you are unclear of. The first priority is to come out your personal plan aka each month save how much for your child future spending/education fund.
That's my advice.

This post has been edited by cherroy: Sep 18 2009, 10:36 AM

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 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.

Purchasing a property using housing loan which is for education plan is a borrowing or leveraged investment in the first place. I am not saying it is right or wrong, just one must understand taking up house loan or any loan, it is a long term commitment.

We are talking about children education plan by properties investment as proposed by forumers earlier.

The liquidity part issue I raised, if one uses properties as children education fund/investment then, it could face liquidity issue afterwards when needed the money time.
You need to sell the properties when time due! if those money are needed for the education purposes.

The focal point of discussion is about children education plan, not properties investment itself. There is huge impact if the properties market crash or the properties is illiquid when time due.

Rental and location wise situation is something we can't control, today it might be highly sort after, but due to changing urbanisation plan, it could mean those properties won't have a buyer anymore after 10 or 20 years time, when the time for the education money. At least in my state, I had seen how a shoplot in the most prime area which cost more than 1 million 10-20 years ago, now more than 1/3 cannot find tenants, not to mention the buyer for it. Although the example is extreme and could be happen in low rate, it is something we must aware or understand of before commiting to it.
We are dealing a lot of 'if' which something we can't control nor can predict one.

Don't get me wrong, I am not against properties investment, just it is some issues which people should be understand of (especially for newbie in investment field), instead just advise other invest in properties will make good money, it is not as simple as that. No offence

a) Ain't we just experience the worst financial crisis? See how many reit, properties company globally went under or need to fire-sale their assets because of inability to get refinancing from bank?
Banks are already well known, "lend you or push you the umbrella when it is sunny day, but refuse to lend the umbrella when raining day"

Yes, banks are always greedy one, they want to give as much loan as they can, because they can make more money. But when things change time, especially crisis time, situation become totally different.
When Lehman went under time, credit market was totally freezing up, nobody want to lend to each others even between banks because fear to each others.

This post has been edited by cherroy: Sep 20 2009, 11:51 PM

Sime never reach Rm0.50 as far as my memory serves. But CIMB did fall to RM1.80, this I can confirm.

The major risk and problem is not about picking when recession or crisis hit. The major difficulty (and weakness for most people) is picking the right stocks or properties (or any investment target) to invest during the crisis. Malaysia economy or stock market might recover from 1997, but certain properties and stocks might not. Eg. UEM Bhd has been delisted (impact of 1997) while for US, GM no longer exist. (Current GM is the new restructured GM, not the old GM, different company already, although it is still GM)
So even the economy recover afterwards if pick the wrong target, your investment won't able to recover. So must choose wisely is the key.

Same with properties, some shoplots were being abandoned during 1997 crisis, which after 12 years passed, and economy growth again, those shoplots still sitting there and being left to be rotten.

AIG before crisis, everything look beauty and solid, nobody knows the risk behind of it, even its management board. So even though Gov must bailout AIG, AIG might not recover at all. AIG has been under reversed stock split 20:1, so even now surge to USD40, in actual sense, it is ony USD2, compared to more than USD60 years back.

So there is no guarantee the gov intervention will prevent the company share price from collapsing. Yes, they won't let the company fail, but it doesn't mean the company has rosy and solid defence for the economy fallout.

b) Not necessary across. Some areas which has passed its prime time, may not find buyer even lower 10-20% which you see lot of shoplots being abandoned one. This particular true on shop lots and those shopping mall that in non-strategic area one. The statement mostly true on residential properties generally which is not hard to find buyer, but for commercial real estate different story.

c) I would say we shouldn't be too complacency on the refinancing side, even though generally there is not much difficulty. As when there is real issue or crisis unfold in financial sector, banks can reluctantly to lend at all which clearly been shown in recent US financial crisis. Also over last decade, most people never experience the high interest environment, so refinancing can be costly as well. Although it is not the case for near term future. Just we cannot take for granted, refinancing will be easy and cheap to get

Yup, there are lot of investment target around, not every single investment target is surely good, nor bad also not necessary suit to everyone. Everyone financial situation could be totally different which may suit or not suit to particular investment target.

Yup, whatever we discussed here is bring out the points of it, so that whenever we make decision, we have clear mind and knowing risk of it, instead of just pure saying properties investment is the one should be in which can make money one which could lead to newbie in investment field has the wrong mindset. No offence and don't get me wrong. I still view properties investment is one of good target, just it is not as simple and must be gaining money one even one has it over the long term.

It is little difference with
6 years commitment vs 20 years commitment.

6 years one, you pay it more advance, hence premium is about 3x higher than the 20 years premium.

Both lock in period is roughly the same and inflexibility is roughly the same.
You still cannot touch those money even you are starving to death now or no money to buy a packet of foods, despite having millions on saving plan.

You only get those money and expected pathetic return after maturity.

But what I know, a lot of agent push more harder for 6 years one....

Saving plan is about protection.
If you die pre-maturely before the saving plan matured, you get the full sum of sum assured, even you just pay RM1000 on the premium on the first year, which can mean your beneficiary get the full sum assured which can mean a couple of ten K.

If nothing happens until maturity then you get back the your premium paid + roughly comparable to FD rate.

Saving plan is not for one to chase after the return, as its return won't be higher much than FD rate, while very high inflexibility due to long term commitment.