Sunday, February 19, 2017

Property vs Stock Investment – Part 3

I started to 'invest' in KLSE stock market in the mid of year 2009, where the market started to recover from bottom. At that time it was a very good timing, majority of the counters shooting up like rockets due to general market recovery. 

I found that it is very interesting as stock market can makes money without doing anything physically. So I started to read a lot of stock investment related books and online articles. I made some money from it from year 2009 to 2012, with return ranging from 12% to 34%. Unfortunately, I'm not investing, but more like speculation. That is why my return is not consistent, even though I increase my investment capital. 

When the market turns bad in 2013, I started to lose money till 2015, ranging from +3% (worse than FD) to -2%. I'm very fade up with stock market and turn back to property investment. But I believe it is worse with the long term financial commitment I committed. So I decided to focus my remaining very small investment capital on local stock market again by end of last year. So far I feel that it is one of the only ways to get good return, if I got the right one by using my past experience and lessons.

Back to stock market investment itself, is it risky? Yes, used to be higher than property investment, because the counter you bought sometimes unable to generate income for you, if the share price goes down or they are not distributing dividend. Property investment used to have very low risk as it brings positive cash flow to investors. But most of them not anymore, due to the huge appreciation on the property price and rental rate cannot pick up in tandem. 

Imagine you have to pay property loan of $3,000 monthly and yet your rental is only $2,200. People may say it is a bad investment because you are losing monthly cash flow of $800. It is very risky by hoping for capital appreciation especially in this bad situation. What if both your tenant and you have cash flow issue and having issue to pay the monthly property loan? That's the risk. 

What about stock investment risk? In fact, the risk is not high as well considering the investment choice you have now, only if you know how to play the game. 

To be continued...

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