Why is it so important to invest as early as possible in your life? Investment is a life long learning process. The earlier you do any investment, the quicker you learn the pit falls, tricks and the best choice of investment for you. You may read as many books and article about bad investment, or quick rich scheme. But you don't really learn about bad investment until you get into the trapped at least once in your life! Older people with many experience may have impart their experience to you, but you definitely will be too stubborn to listen to their advice. Psychologically, people tend not to listen to other people advise especially when they are younger, inexperience, have high level of education, well paid job and laid back family background.
Do you realize that most people who were trapped in the Quick Rich Scheme are Malay people? The poorer they are, the most likely they are getting into the trap. I have encountered many people who are willing to take a personal loan in order to invest in a dubious investment especially in a MLM (Multi-Level-Marketing) scheme. Their scheme are almost the same. But, the only different is the face of the victims.
Most people who were trapped into a Quick Rich Scheme including the one hidden behind MLM scheme are the ones who are so eager to earn more income. The best way to earn an income is the one without the need to spend any capital. We work everyday. Beside our meals and transportation cost, we don't need to come out with anything to earn. In fact, even if we don't work, we still need to eat our meals. Thus, the only actual cost in our daily work is our transportation cost. Therefore, it is illogical if someone ask you to take a personal loan and invest in their business plan (including MLM). Yet, every year we can read and listen to many sad stories about people being duped in many Quick Rich Scheme.
In order to ensure your investment is secured, you should have the title of the investment. The title of the investment must be the one recognized by the government institutions especially property title, loan capital, business agreement and etc. Many people easily believe with promise of words. Thus trapped, easily believe the false claim made by the MLM agents such as their scheme has approval from the government, many prominent people already join the scheme, their product is proven to bring good health and so on. Yet, they never bother to find out on their own or ask experts in the related fields.
So, how can one start a property investment whereas property price keep increasing? The answer is easy: live frugally for a few years and use your brain instead of your emotion which always longing for luxury. Below is an example of a person with a comfortable starting salary or a just married couple with a comfortable combine income.
Whatever your family earn, you should assume your income is only half of it! Your target expenditure must not exceed 50% of the total income. This is especially easy nowadays because most newly wed couples are both working. As shown in Table 1, your family can quickly accumulate capital to buy a property after one year.
In reality, most newly weds cannot control their lust for luxury items such as each of them need a car, buy expensive car whereas a small car is suffice (no child yet). In the end, most newly weds financial at the end of the year is as shown by Family B. Most of this type of people assume whatever they earn it is their right to spend. True and false. It is their right. But they can never out run the inflation especially when they started to have a child. With RM32,000 saving, Family A can easily buy a decent house for about RM250,000 to RM300,000 so that they don't need to pay any rent. Although in Johor Bahru, if Family A is willing to learn, they can buy a two storey terrace house! I already helped a person with only RM2,000 monthly salary to buy a house for RM430,000 (two storey cluster house)! If that person can do it, why not you who have better income?!
If Family A continue live frugally, they can make another property investment in the next two years as shown in Table 2. After buying the first house, Family A also decided to buy an ASB loan for RM50,000 with monthly payment about RM320 per month for 25 years. (see http://surexperience.blogspot.com/2014/02/opportunity-cost-in-property-investment.html)
Family A uses 50% of the ASB dividen for their annual vacation and emergency fund. So, after another two years, Family A will be able to accumulate enough capital to buy another house for about RM450,000 with monthly payment for about RM2,000 per month. Based on the monthly balance, it seems impossible for them to do so. But, if one is willing to learn, it can be done and have been done by many knowledgeable people.
By now, Family B still decided to enjoy their life without making any property investment. Although the saving between both families does not look much difference, in reality Family A worth more due to the first house they bought. After two years, their first house price is estimated to increase to RM230,000.
If Family A continue live frugally, they can make another property investment in the next two years as shown in Table 3. After buying the second house, Family A also decided to buy another an ASB loan for RM50,000 with monthly payment about RM320 per month for 25 years. (see http://surexperience.blogspot.com/2014/02/opportunity-cost-in-property-investment.html)
By now, only then Family B decided to buy a house. And to their surprise, all properties prices already skyrocket! Then, they blame the government for all their misery to buy a house. Although the saving between both families does not look much difference, in reality Family A worth more due to the first and second house they bought. After three years, their first house price is estimated to increase to RM270,000 and their second house worth about RM550,000.
And, if Family A is willing to learn further, their property investment can be multiplied faster or they can invest in a higher return property. By now, it does not matter how much children do they plan to have, which university their children can study and when they can formally retire. After third property investment, the investment growth is no longer linear. If they are smart, the property investment and worth have exponential growth! Thus they can out run the inflation and live happily ever after.
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