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Saturday February 22, 2014 MYT 12:50:00 PM
Saturday February 22, 2014 MYT 1:10:23 PM
By THEAN LEE CHENG
ABOUT three to four years ago, a friend in his 20s bought his first property. Prior to this, he was trading in stocks. His interest in the property sector came about when he saw the double-digit price increase during the run-up in the property sector in 2009/2010.
While his interest in shares continues, it was the property sector which became the main focus of his attention. His intention was to sell the serviced apartment once it was completed at a profit, a strategy taken by many during those heady days, and today. He has the same principle when it came to stocks. If he has read this book Property Vs Shares, he may have taken a different strategy for his investments.
This book serves as a guide for those who are interested in either or both forms of investments. While it was written with beginners in mind, it provides useful reference to readers on higher rungs of the investment ladder.
In Malaysia, the two most common investments are properties and stocks. While there are unit trusts, these are, at the end of the day, also linked to stocks. The last several years, a number of books on property investments have appeared on the shelves of our local book stores. Most, if not all of them, are focused on property investments alone and therein lies the difference.
Property Vs Shares compares one asset class against another. It has two authors. Peter Koulizos is the author of The Property Professor’s Top Australian Suburbs and lectures on the subject. Zac Zacharia lectures on share investment at TAFE SA and is a founder of a wealth management group.
Both of them provide some ground rules for investment decisions in today’s volatile economic climate. They look at how property and shares have performed historically and give pointers on research.
In today’s search for yield, all sorts of schemes have entered the market. They highlight some of these scams and schemes. In short, they look at investments much more broadly, and takes into cosideration the many who keep their money in time deposits.
Using the analogy of two boxers in a boxing ring, one representing real estate and the other shares, they begin with that all pertinent question Why Invest? and explains the importance of being a shrewd steward of one’s finances if one wants to retire early and richer.
They outline from the start that saving and investing are two different things. In order to invest, one must first of all, begin a journey in savings. But while saving, as in keeping money in a time deposit may be “safe” and “risk-free”, the returns are minimal. On this premise, the authors suggest other forms of investments which, if prudently selected and managed, and depending on when one enters and exits, may provide a better yield.
My 20-something friend could have just kept his money in a fixed deposit account but with the cost of living escalating, he figured he would be earning negative interest rates in no time. And therein lies the value in property and stock investments – they provide a regular income and have the potential for capital appreciation.
However, there are caveats to this and the authors explain the perils of both clearly and succintly, without diminishing the importance of diversification.
Although this book is based on the Australian property sector and the Australian stock market, it holds within its covers very insightful information and suggestions about property and stocks that are universal.
The last several years, there has been a great interest in property investments on a global scale with Malaysians buying real estate at home and abroad, and with it comes currency risks. The Malaysian stock market has generated both interest and returns for investors. What and where one buys, or feels most comfortable with, depends on many personal and individual factors as well as global and national events.
Investment markets are inter-related, like a big jigsaw puzzle. When property prices dip, the shares of property companies may dip. When interest rate goes up, there may be less application for housing mortgages, which in turn affects bank revenue and bank stocks.
The importance of having some knowledge of economic and investment cycles are clearly spelt out with graphs and tables. But these details are used sparringly.
As mentioned earlier, my 20-something friend may have taken a different route had he read this book because in the middle of this reference guide, the authors draw the distinction between trading, investing and speculating.
The main difference is the investment timeframe. Trading on the stock market can occur within seconds whereas speculating on property can occur within weeks or months. They suggest taking a longer time frame with both.
Only you can decide why you are in the game – is it for capital growth, or for income, or both? Do you want to fund a certain lifestyle, or are you hoping to retire richer and earlier? If you are able to answer the above, you will be guided as to what suits you best. This book will set you on the road to investing with some insightful information in hand.
There are many nuggets of gold to be found in this book. Whether your preference is for stocks, properties, or both, there is a place in your book shelf for this slim volume.
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