1. Saving is a good practice.
You cannot outrun national and personal inflation by simply saved your income. Saving is a good habit to prevent yourself from indulging in excessive spending, good as a preparation for future investment, and preparation for any emergency needs. No matter what is your income, depending on your saving a lone is not a good idea in the long run. And once in a while, national and personal inflation may jump twice, trice or quadruple depending on related national and personal issues in the year.
Of course, you should not invest all your saving. There must be a certain portion for saving and investment. The ratio may depend on your experience. But, you may learn from other successful people of their financial planning habits.
2. I should only invest when my income has reach a certain level of comfort.
Investment is not for rich people only. In fact, if you feel your income is always not sufficient to cover your monthly expenditure, you should keep saving and invest consistent portion of your income. The more discipline you are in saving and investment at a specific portion, the faster you can grow your additional income and hence solving you financial problem.
3. Investment is a long term return.
Some people are worried that they can only get the benefit from the investment only after they have reach an old age.There are many duration of maturity in an investment. In property investment, some of the property can easily mature (profit more than 100% from purchase price) upon the building completion which is between two to three years from signing the sales and purchase agreement. I have met several investors who get a high return (more than 50%) while the buildings were still in development. But this is a very dangerous practice since you may be labeled as a speculator rather than a property investor.
This is the mantra for a speculator. And this kind of people especially inexperience ones can easily fall into a Quick Rich Scheme!
5. Business is always a good investment for everybody.
Siti Khadijah invested in the Prophet Muhammad by believing in his ability to give a fair trade while having a profit at the same time. She was 40's while he was 20's. While the Prophet successfully made a good trade in Syam, she was not working in the trade at all. So, everybody has their own suitable role. Siti Khadijah was good in evaluating other people character based on the information she got from other people.
Sometimes, the nature of the business is simply not suitable for you to venture in. And you may find easier investment to venture by properly evaluating the nature of the investment. There is always at least one investment which is good for you. You should follow your passion.
6. I can simply know whether it is a good investment by following the crowd especially my close friends, and relatives.
Herd mentality always make society misery. Educated and creative people can always foresee something beyond current situation.Sometimes, creative people learn based on their life experience rather than informal education centers. Many people fall into Quick Rich Scheme because they have herd mentality. By believing certain prominent names have join the investment, they follow suit. They don't bother to check for a proof. This is a recipe for a disaster. Geneva Gold, Swiss Cash, Pak Man Telo are some of the schemes which have cheated billions of RM from herd mentality people.
Sometimes, the crowd is right. But, you are too late to join the game. However, you can still join the game by changing the strategy and tactics. There is no permanent strategy and tactics in a property investment. Everybody has changes and needs in their lives. The trick is to find the best strategy and tactics for the right moment.
7. I can trust the investment sales person 100%!
The sales person is the very first person you should always doubt. If the sales person claim how good is the investment, you should always ask for a proof. In property development, the sales person is always confined with the information related to the company's development. If the development is medium to low size, the economy growth in the area is always depending on other areas of development. Sometimes, what a sales person claim may be true to a certain extend such as current economy condition. But, you should always ask the "what if" scenarios especially the worst case scenarios.
For example, sometimes developers promise to build a flyover to an highway in the developed area. But, how much assurance can the developers give? There were a few cases where the developers fail to develop a flyover even though the development area is almost finished.
8. Unknown business model can always give me a high return.
Only a master can produce a new property investment model. A novice can easily fall into a new model trap! There are many factors to consider when formulating a new investment model. Most of the time, these are Quick Rich Scheme or an outright cheating scheme. However, if you can think logically, you can easily spot it is a scheme to cheat you. This is especially true if they ask for your money without any guaranteed which is recognized by the government.
9. Gold is always a good investment.
Gold is only good to hedge your wealth. It is not a mean to grow your wealth. Unless you are willing to trade golds which means you are a businessman rather than an investor, you are welcome to buy gold. You should always ask for physical gold. A certificate gold even it is from a bank is not a 100% assurance. A paper gold can easily wipe out from the market. And you can easily turn poorer.
The best thing about property investment, you always have the paper proof assurance and law protection either in the form of Sales and Purchase agreement, Land title, or loan agreement. Sometimes you are being protected as a group. You can check whether the deposit to be paid is true by checking various licenses related to the development, company past and current activities, and the others.
10. An investment which can give me a permanent passive income without doing any work is good for me.
Everybody must work to earn something. Even the richest man in the world is still working. Therefore, it does not make sense you can generate income without doing any work! What you see a successful investor does not need to work is actually, the way they do the work is different than your regular permanent working hours. Sometimes, they are actually working just by casually talking to you. They may be look like traveling for fun, but they are actually evaluating an investment in the area.
11. I have a lot of money to invest. I do not need to ask anybody or friend about the next investment to do especially my friend who has no money!
It never hurt to ask. You may have to bring you pride down a little. Sometime, people don't want to entertain your questions because they are too busy. Sometimes, the person you ask have personal problem that need immediate attention. But, one thing for sure, knowledgable friends are a commodity. They are rare. You should treasure them by asking them!
12. A high return investment is a headache. I should avoid it.
There is always an opportunity for a high return of investment if you believe it is out there for you. The moment you believed it is not possible for you, then it will never be even though the opportunity is always in front of your eyes. Most of the time, people lack the sufficient knowledge and experience to identify a problem as an opportunity. Sometime, the investment we do may give us only a small return. But as time goes on, the return may grow especially if you choose a strategic location.
13. Investment is always about money, using money and monetary return.
No, no, and no! Investment is actually about psychology. Investment is about creativity. And investment can give you more than just money.
14. I should always spend my bonus to reward myself.
Bonus should be treated as a normal income. But, it is better to treat is as a good opportunity to increase your saving and investment portion which is only once a year! Some companies prefer to give a national average salary but very high bonuses. It is a method to assist and force you to save your money. Once it is in your hand, you must be disciplined enough to follow item 2. Some successful novice investors will use the reverse ratio of saving, investment and spend for the bonus compared to a normal salary.
15. The first priority in investment is to make money.
No! You can make me jump from the chair by saying this! The first priority in ANY investment is to ensure you will not lost any money. You must avoid being cheated. You must avoid believing facts which cannot be substantiated especially if the facts are from the sellers. You must avoid using your feelings when making the judgement to invest.
16. I can trust my relative in an investment to be done.
Your relatives can be your worst enemy if you trust them blindly. Worst, your relatives may give an honest opinion based on what they knew, but you are the one who shoulder the burden from any bad investment. You should do you own homework, research and evaluation before you do any investment. Most people who want to cheat other people are very talented in giving excuses, telling bad luck they had to gain mercy, use religion to show they can be trusted, and tonnes of other tricks in their sleeves.
If you have realized any misconception in any investment especially property investment, please share your experience by writing them in the comments.
