Cash is king? Not so with the impending onset of inflation.

I get your point about it being liquid. But looking at how inflation is going to hit us, holding on to cash is also not a good thing.

Maybe we should look into other forms of investment. Something that is not cash which is not keeping in pace with inflation and not properties which lock up your money long term.

I really haven't figured that out yet. I actually have most of my money in FDs.

3.7% p.a. returns only. And I am pretty sure the real inflation rate is higher than that.

Lets see, unit trusts. So many out there and some are not really giving that good returns. But I read that Public Mutual won many awards recently for good performance in their unit trusts recently.

Share market. Too busy to monitor. Also got burnt (a bit) before....once bitten twice shy.

Heh-heh. Sound advice.

Relax. Most of us can recognise good advice. But why "trust me"? You speaking from experience?

The government is scrambling to show that it is doing something to reduce the effects of the oil hike.

There are different segments of the market - the high end, mid range and low end segments, each have their own factors affecting demand and supply and also price.

Those around KLCC still going up as there are also attractive to foreign investors.

I think in 1997 there were quite a number of fire sales. You know, those who got burnt to a crisp in the market and had to liquidate.

Then there was the exodus of foreign professionals out of the country. Quite a number of condos in Bangsar went vacant. Those who couldn't hold on had to sell.

This post has been edited by joe_mamak: Jun 19 2008, 10:14 AM

Interesting to know that Bank Negara is reducing easy credit or excess money in the system.

I read this article recently in Malaysiakini http://malaysiakini.com/opinions/84519

Here are some excerpts (for full article, please support and subscribe to Malaysiakini).

However in another report on 28 May, Dr Zeti announced that broad money (M3) expanded by RM 51.6 billion or at an annual rate of 12.1% at the end of quarter one (Q1). If the growth of money for Q1 is 12.1% and the growth for GDP is 7.1%, the difference of 5% should be translated into inflation. That extra 5% of money in circulation is causing havoc in consumer prices.

Yet, when it was announced in April that the inflation rate for 2007 is 2%, no economist in the country lifted an eyebrow. No politician from both sides challenge the statistic. That was despite the Statistics Department reporting – Food and Non-Alcoholic Beverages prices increasing by 47.1%, Transport prices increasing by 18.3%, Housing and Utilities prices increasing by 13 .9%.

These three components which matter most to lower middle income and the poor, recorded double digit inflation, and should have immediately set of alarms.

During the past few months the price of rice has increased from RM 22.30 per 10 kg to RM 34.50. Milk powder from RM 37.00 per 2 kg to RM 42.00. Tea powder from RM 6.50 per 500gm to RM 9.50. Butter from RM 5.40 to RM 9.00. Jam from RM 5.40 to RM 8.80. Shahrir Samad should take note that it's not 'a joke'.

Dr Zeti has led like a pied piper playing to the tune of economic calm. Economists and politicians seem mesmerised to her tune that we can weather off the economic turbulence ahead. Meanwhile the people are encouraged to spend. Carefree use of credit cards. Banks are in competition to offer instant approved loans, some with zero interest for 6 months.

....

Money is spent on the stock market, as we saw the KLSE rise to 1500 points before the general elections, to encourage more spending and purchasing. If the spending is on goods and services from current economic output, then it is good and helps add up the GDP. But with cheap loans at below inflation rates the money quickly go towards speculative spending for quick profits, like second hand properties, stocks and shares.

This will inflate the economy and very soon bubbles build up. Encouraged by the artificial demand, business people will venture into more risky projects and speculative capital. All these lead to financial distortions and spin the wheel of inflation faster. When the tide turns, buoyed with rising interest rates, it will be financial ruin for many. Perhaps the tide has not turn, because the floodgate is kept locked, at least for now.

I don't have the details. Only heard from one or two agents that there were some really "good" deals going around because the sellers were desperate. But potential buyers were also hesitant and afraid.

What a chaotic and depresing time that was. Job cuts. Companies went bust. MBf imploded. Developers had to abandon projects, we still see some of them around KL today. The exchange rates were at ~ RM2.6 to US$1 and ~ RM1.8 to S$1 (pre-crisis). Danaharta was set up to solve the NPL problem. I remember one agent telling me at that time, the expatriates are leaving and they won't be coming back. He stressed on the word and.

Demand just went down and property prices went down along with it.

On a personal note, my family property which we rented out, the tenant asked for a reduction or else.....

While things may not be as bad now as back in 1997, it doesn't look too promising either.