14/11/2014
Food for thought Friday:
Q: Why should I choose to invest in property over other investment choices available?
A: Firstly, property investment is not for everyone. Depending on the purchase price, you will need to have a certain amount of cash and CPF for your deposit and stamp duty payments.
Secondly, you will need to have holding power. Do not ever be caught in a position where you have to sell your property to free up much needed finances. If you are ever forced to sell your property, chances are you may not be able to get the best selling price and I know of certain clients having to sell at a loss.
Having said that, properties in Singapore generally appreciate in value over time. Maybe not in the short term, but definitely in the middle to long term. If you have bought a property ten years ago, most likely you are looking at a profit if you intend to sell it in today's market. Depending on the property you have chosen, rental yields may be from 2% onwards, which gives slightly better returns than if you put it in a bank.
In addition, if all else fails and your property is losing money for some reason, you still own the property and you have a roof over your head. Ride out the downward property cycle, continue holding on to your property and wait for the market to recover. Compared to shares or other financial instruments, sometimes it is very difficult to recover your investment. Worse still, you are suffering losses on paper, losing money without gaining anything back, except maybe a good experience to learn from.
Have a great weekend ahead folks!
Jonathan