Liquidate your stocks since now KLCI is all time high

Classic case of over-leverage. Even though the income look wonderful, any hiccup will send the whole plan koyak

Maybe not "over leveraged" wor if his "Dividends (Business): RM35000/month (average)" comes in like clockwork or that amount is a prudent % of his average takings, ie. viewed in terms of (debt payment / income)

However, his D/E i think is waaaaaay over 1
This "over leverage" U mean?

Hi guys, first time bump into this topic n got me interest to read post by post n make me eager to come out with my own saving and expense plans to control my cash.

I am 23, accountant, just finish my 1st month working as accountant after a year in design company. I am accounting graduated but interested in artwork and advertising designs.

Living with my parents and elder brother, single and no smoke, no drink.

Income (monthly):
Salary after epf/sosco RM2585.
Freelance designs/maintain facebook page RM100-200 (this variable income 50% goes to saving 50% goes to entertainment + others)

This is my projected expense and saving plan which I would like to follow to control myself.

Expenses (50% from RM2585 fixed salary): RM1292.50
Fixed:
Medical Card RM200
Car Instalment RM484 (5 years term, 4 years remaining)
Phone reload RM30
Car allowance (save for car insurance/oil change per half yearly) RM100

Variable:
Gym membership + fatburner pill RM195
Food allowance RM50
Petrol RM150

Total Expenses: RM1209

Cash to spend on entertainment + others = RM1292.50 - RM1209 = RM83.50


Saving (50% from RM2585 fixed salary): RM1292.50
Bank RM1292.50


Heres my concern, may I know how can I appreciate my money in saving? FD? property investment with rental income to cover loan repayment?
From what I learnt in this forum, is that I need to save atleast 6 months of expenses in FD, then only I can proceed to save my money for downpayment for property or invest it in REIT or UT.

These few days I have been thinking of opening a burger stall in own carpark area at nite from 8pm-11pm.

This post has been edited by David900924: Jun 3 2013, 07:48 PM

If I were you, I would have liquidate properties 8-11, mainly not generating income, and additional from 6 or 7 or both. That alone will give you 30K less in expenses, thus, you will still be able to cope with the new reduced expenses. You better pray that you still able to rent out the remaining property, else it will be goodbye to you. " If you buy things you don't need, you'll soon sell things you need" - Warren Buffett.

Just curious how on Earth getting 4.5 nett pay allows you to have up to almost 70K in monthly installment for property? I'm quite sure even you own business, bank will take 10% of the turnover as your income, assuming you have about 30K profit, should entitle you additional 3K which making your income at 7K range.

Yes

Thanks for your respond:

On your question:
1. I can't liquidate 8-11 as I bought this property at a value for the developers and is currently enjoying incentives for up to 5 years. Disposing them will nullify the incentives.
2. Property prices of 8-11 is rather stagnant and there is still no market yet for them. To liquidate, will have to drop prices and will result in losses.
3. I already found prospective tenants for 3 of those properties and the rental income is approx 10% higher than my month commitment.



Let me clarify a few issues:

1. Invested in a business ard 2009, and the dividends they pay me is approx 300k-600k/annum for the past 2years. I have no management control of the business, just one of the directors and receive dividends annually.

2. I just started working full time in late 2010 till now and hence drawing monthly income.

3. Started investing in properties way back in 2008, at that time getting 90% financing and 40-45 years tenure is way easier than now.

4. My prove of income to the banks are as follow:
(a) Annual Income Tax Filling
(b) Stamped Tenancy Agreement
© Employment Pay Slip
(d) Dividend statements from stocks

Note: If you are a premier/priority/priviledge member of banks, the margin they can allow is up to 130% of your commitment.


Current Situation:

1. Made a mistake by depending too much cash flow from my business.
2. I had this ridiculous ambition of having a property portfolio of tens of millions by 30, and yeah.... f***ed up real bad.

Path Forward:
1. I hope someone in this forum can advise on the options I have at this juncture and what are their pros and cons.
2. Someone with similar past experience to share their thoughts.

Greatly appreciate your valuable suggestions as I can't really share this with my family or friends.

Thanks again

Thanks bro for your response

Yes, you are right, stock prices are at all time high now - way over their intrinsic value . Liquidating them will allow me to have immediate cash.

However, I am not really keen of liquidating my stocks as all I am investing in are solid blue chips. Reasons:

1. Pay regular dividend and dividends has been growing at a rate of 5-7% per year since the last 5 years.
2. Disposing the stocks and reinvesting the proceeds in properties will cause an unbalance to my portfolio.
3. I would rather solve issues within my property portfolio using existing avenues within itself.

Nonetheless, liquidating stocks will be my last resort if given no other options.

Vector89, it's fairly obvious that u have already made up your mind that u want (b) financing, you are just seeking an answer that u want.

Again, I'm still with the proposal of liquidating properties 8-11 as these properties don't generate income. Short term pain is better than long term pain. If you liquidate those income generators, I can assure you that it will not be long before you ARE FORCED to sell everything.

Regarding your income, I don't have doubt, just that I wonder how on Earth banks will let you run into this situation. 300-600K per annum just mean that the income taken is about 30K per annum. But then again, you have tenancy agreement, so I supposed those contributed to your extra income approval rate.

I wonder how many more cases like Vector89 out there. How much time do these people have? And when they have run out of time, then will the property market bubble finally start to burst?

The property investors are assuming that their properties will get rented out and/or will get sold at handsome profits. The moment the rental income stops, the bank loan repayment stops, and it all falls apart.

On properties 1-7...

Rental income : RM 43,750
Loan payment : RM 37,870

The net amount will be RM 5,880. That should be sufficient to cover property 9 and either property 10 or 11 (with only RM20 shortfall).

Personal expenses of RM 7,500/mth would be an area to review since there's no breakdown of how much goes between necessities and discretionary spending.

Maybe instead of liquidating 4 properties, it could be possible to liquidate only 2?

Vector89, you are only 24 years old??

This post has been edited by heavenly88: Jun 4 2013, 03:26 PM

I was wondering what business that you are in as they can pay you 300K-600K per annum?

I would be grateful for some advice on what to do with a 5 figure windfall.
I am inexperienced with investment, and my feeling would be to get some REIT or blue chips but that isn't attractive because of current high prices.
Should I stash it into Public Bank FD Plus at 4.16% and wait until I am comfortable with the market?

I can recommend my friend in financial planning. He can help you with lower-risk investment/ savings. PM me!

Cheers

Everything looks good on paper but it does not reflect the true nature where ceteris paribus might not apply.

there is a FD plus at 4.16%? I googled and can only find up to 3.15.
Could you post a link or something please

Hi Financial Masters of Lyn,

I need some advice on my non-financical planning..
I've read through lots of the pages here (20+ pages) but not sure what advice best suits my position.

Details;

Age = 25 this year

Savings
1. Bank savings = approx 30k
2. EPF = negligible, Just started working (cant take any money out, and account 2 is very very low)
3. Company stock option, 10% of Basic pay every month. (Just started, minimal amount, not very liquid.)
4. Old car (22years old), No house

Income

1. Salary = 6150 (Take home pay, After EPF & Tax, & This is an average value taken over the last 5 months)
2. Wish i could write something here..

Monthly Expenses

1. Food = RM 350
2. Study Loan (0% interest) = RM 550 (18 months remaining)
3. Car repairs = RM 100
4. Car service & Fuel = RM 150
5. Entertainment spending = RM 350
6. Rental = RM 420 (non-negotiable/ not changeable)
7. No Phone expenses, No personal insurance.

Total Spending = RM 1920

Net = Income - Spending = +RM4230

Looking for some advice:

1. I dont have any passive income, and would like to start a good sustainable investment. Because of the nature of my work, my "free time" is limited, although i do have internet access most of the time. I have read about Forex, but havent practiced any mock-trials yet, so unsure if i can actually make any money off it. It seems to require alot of time investment as well.

Property wise - The property prices in KL are crazy high, and i am unsure whether i should bank in all my savings to get a house now.
I often read about property in Klang valley, and new developments, but all the prices seem out of reach. Seems i cant afford anything over RM 400psf. and nothing under RM400psf i like.
You may say im too young to start buying a house, but if i dont buy now, (trend wise) seems like i will never be able to afford a house in KL.
Personally, I will not settle for a 500sf shoebox.

2. My salary depends highly on allowances, so it can go up and down. the value above is just an average. I expect my average to drop to about RM 5000 for the 12 months. (Dropping my Net income to +RM3080/mth)


3. I dont have the time to monitor stocks, and probably dont have the 'drive' to monitor them.

So any tips or ideas?
I dont have a solid financial plan at the moment, and it doesnt seem too bad for me, as my expenses are not that high.

Thanks in Advance!

This post has been edited by win44: Jun 7 2013, 04:34 PM