"The BIRTH of a HOMELESS GENERATION"

Is owning a property a dream to many? Would you like to have your own home one day? I guess many do want it. Sadly, as I conduct a research, I discovered there is this growing phenomenon facing the youth population in our country Malaysia, that is "The Birth of a Homeless Generation'.

Affordability

1) Based on Budget 2014 announced by our Prime Minister Najib in October 2013, per capita income is estimated to grow to US$ 17,173 (RM 54,253.97) from US$ 16,743 (RM 52,895.49).For your information, per capita income refers to average income and is used as a measure of the wealth of a country's population. 

2) That will work out to be an average of RM4,521/month per capita income. Could people afford to buy a property based on that income?

Question: So where would you want to stay? 

Answer: Hmm~ I want to stay in a condo within Klang Valley with proper facilities & established public amenities, I want a good lifestyle (LIVE, WORK, PLAY). 

Latest Property Prices, 2014

(a) Setia Walk (Puchong, Selangor)

Selling Price: RM611,000 (1,390sf, 3+1 Bedroom)
Source: Propwall.my

(b) Gembira Residence (Kuchai Lama, Selangor)

Selling Price: RM700,000 (1,168sf, 3+1 Bedroom)
Source: Propwall.my

Alright, assume you are looking for an older condo and found a very good deal with a Selling Price of RM 500,000 ( 3+1 Bedroom, 1300 sf Condo at Klang Valley) 

Please refer to the table below for better illustration:

Item	RM
Property Selling Price	500,000
Down-payment (10%)	50,000
Loan Principal (90%), 35 years loan	450,000
Interest rate (BLR – 2.4%), BLR = 6.6%	4.2%
Monthly Loan Instalment	2,047

Remember about the average income per capita of RM4,521 stated above? Your balance will be:

Balance of Disposable Income: RM 2,474 

(Workings = RM 4,521 - RM 2,047) 

What about other expenses? Lets take a look:

Item	RM
Balance Income	2,474
Car Loan (rm60k +/- car)	600
Petrol	300
Toll	50
Car Park	50
Car Maintenance	100
Insurance, Road Tax etc	200
Car wash	50
Total Car Expenses	1350
Condo Management Fee	250
Food (rm20 x 30 days)	600
Smartphone bills	100
Entertainment (movies, holiday)	200
Clothing	50
Balance (Deficit)	(76)

Wow, negative balance of RM76...

What about parents allowance? baby expenses? property quit rent & assessment fee? holiday expenses? insurance payment? etc

IMPORTANT QUESTIONS WE SHOULD ASK OURSELVES:

(a) Do we have RM100,000 CASH in our bank account by 30?
10% downpayment of rm50k, legal & stamp duty fee for Sales & Purchase Agreement & Loan Agreement of rm20k, renovation, furnitures etc

(b) Is my income sufficient to support my lifestyle expenses and to service a property loan in the future?

(c) Where would I want to live in the future? What type of property? What kind of lifestyle?   

I would say most youth in Malaysia would not have RM100,000 cash by 30, and would not have an income that is sufficient to service a property loan, car loan and daily expenses.

The plan of owning a property is usually delayed, or will become a far-fetched dream. Just look at the youth in Singapore & Hong Kong, it's becoming an ultimate dream to just own one property on their own.

Many youth (I said the word 'many', not all) will choose to deny this phenomenon, they basically live in denial. And many will say, it's alright the property prices will come down, I will make my purchase then. It's true to a certain extent, lets take a look:

Cooling Measures on Property Prices:

Below are 6 measures taken by the government to cool down the property market by reducing speculation and making sure property loans are granted to genuine buyers who can afford to service the loan. (We don't want to be like the United States who is recovering from the subprime-crisis)

1) Removal of Developer Interest Bearing Scheme (DIBS)

2) Higher Real Property Gains Tax (RPGT)

3) Loans to be assessed based on Net Income (after deducting EPF, Socso, other loan payment), and not Gross Income 

4) Loans based on Nett Selling Price for new property launches (after deducting discounts, legal fees etc)

5) Foreigners can only buy properties above RM1 million

6) Refinancing on Residential Props under Individual to a maximum 10 years period

With the measures taken above, property prices is expected to reduce marginally or remain flat in locations that are not very attractive.

However, there are factors that will drive property prices up in good locations (5-10% increase), refer below for better explanation:

Factors to drive Property Prices UP:

1) Subsidy Rationalisation on Sugar, Petrol, Electricity etc 
Just take a look at the prices for 'Teh Tarik', 'Roti Canai', 'Mee Soup' etc. Increase in construction cost or daily expenses will be passed on to the next property buyers.

2) Supply vs Demand in key areas (Greater KL, Klang Valley, Penang, Iskandar Malaysia)

According to a property market report by the National Property Information Centre (NAPIC), average housing completion yearly was 100,000 units (Supply) relative to the average annual household formation, which was 140,000 (Demand).

Therefore the issue of not producing houses fast enough in key locations to cater to the increasing demand arises.

3) Foreign investments

Foreigners from Singapore, China, Hong Kong etc to compete with locals to purchase properties in strategically sustainable locations such as properties within Klang Valley, Greater KL, Penang, Iskandar Malaysia etc.

Further upside for Property Prices come 2015:

Goods & Services Tax @ 6% (Implemented by April 2015)

We have already noticed the price hike of daily consumers goods & services, the issue is the prices will increase further in 2015 when GST is implemented. You may refer to countries like Singapore when GST is implemented in the past.

With the increase in construction cost, who do you think the developer will pass on the cost to?

Reflection:

I really hope that I am WRONG and my friends are RIGHT that property prices will go down to an affordable level in the future, as many could afford to buy themselves a property.

But what if I am RIGHT, what if prices went up to RM700,000 for 1,300sf condo in the Klang Valley? Wouldn't it be a BIG BIG PROBLEM for many youth out there.

There is a saying, it's of little use to make any prediction, it's better to be READY at ALL TIME. I prefer the latter over the former.

Solutions:

1) Get one property at a discount AS SOON AS POSSIBLE especially for people without a property.

2) Increase FINANCIAL EDUCATION to make GOOD FINANCIAL CHOICES every day that will make a great difference in your life.

3) Take MASSIVE ACTION to make it happen, merely knowing something without acting on it will only make you a FOOL.

P/s: You may 'LIKE' my page in Facebook to follow more interesting posts in the future (George Leong's Investment 
Journey)

You may INBOX (Facebook) or WHATSAPP me (017-6593817) to register for this Saturday (30 April 2016) "FINANCIAL INVESTMENT WORKSHOP", from 9am to 5pm, Subang Jaya.

My Own Story: Learn to Play The Game of Money

I believed it was during my SPM years that I kick start my journey towards learning the game of money. I had a hard time back then as I have little interest in studies as teachers did not really share how we could apply the knowledge in our everyday lives. It's more like just reading and memorizing the textbook for exam. And I know it could not really bring me anywhere towards financial freedom. But still, I need to make sure I do well to enroll to a university.  

There was a POPULAR bookstore beneath my tuition center 'Kasturi' and whenever there is free time, you would see me there searching for financial and motivational books. 

As back in 2005, there are hardly any books from local authors about investments in Malaysia. Somehow I managed to find some and felt glad about it.

I recalled reading Azizi Ali "Millionaires are from a Different Planet" & the late Tan Sri Lim Goh Tong "My Story". Both books literally blow me away as it's far more interesting and practical compared to the textbooks in school.

Since then, little George started to register for online newsletter from financial author Azizi Ali (one of the pioneer in Personal Finance in Malaysia) and would receive monthly updates. Besides, I would search for financial articles (The Star newspaper) and magazines (Malaysian Business & Personal Finance) to read.

The more I read, the more I learn that the world of finance is just fascinating, and how unfair it could be to people who chose to ignore knowledge regarding our world's financial system.

Read: 

During those years, attending a seminar or workshop remains a dream for me as I could not afford to pay for it (RM790-3,800/pax). However, saying "NO" is not an excuse hence relying on just books & free newsletter is the only way for me to gain knowledge.

What about learning from people? Well, when I observe the people around me, I discover that my family members, friends & teachers do not have a financial background, and they know very little about Personal Finance & Investments. Thus I have to rely on my own to make a difference.

Why others are rich? (Assuming they make money the ethical, honest & legal way)

What is the main difference that makes the difference? Why the disparity gap of the rich & poor is widening through the years? 

Well, it all comes down to making FINANCIAL CHOICES every single day, and that choice comes from FINANCIAL INTELLIGENCE. 

Where does that come from? 

It comes from FINANCIAL EDUCATION^^





 

Learn To Play The GAME of MONEY

Question:  How to make MONEY?
                                                    
It is interesting to discover that almost everybody in this world would want to be rich to live their desired life, who doesn’t? The interesting discovery is how many would actually ask the question HOW and would TAKE ACTION to find the answer? 

Like students in class, whenever students could not figure out a question, they would raise their hand and ask the lecturer how. I think that is easy to understand. Surprisingly in reality, many would not ask the question 'how' when it comes to the subject of money. Indeed it is an interesting finding based on observation.

Therefore, we must take the initiative and do the best we can to learn from people who are financially successful. We have to learn how they made it, and what are the secret strategies involved. 

In short, we have to 'Learn To Play the Game of Money.'
  
"The more you learn, the more you earn" by Warren Buffett is very true.

Most people have not learnt how to play the GAME OF MONEY; they do not know the rules of this game and would therefore find themselves not being financially independent even though they worked very hard.   

It's like playing football without knowing the rules of the game, what would the possible outcome be?

Remember the monopoly game we played since we were little kids? Wonder why some would win while some often find themselves losing in the game? 

Well, you would notice that the winners often win due to their nature of being a risk taker that would made them own more properties and less money on hand (they think wealth = properties).  While on the other hand, the losers usually dislike owning more properties and would love to hold cash in their hands. Hence they usually shy away from making any huge investment in buying properties (they think wealth = money in their hands). Therefore, it is just a matter of time for the winners to win as the probability is high for the losers to enter a winner’s property.

That is my experience when I played monopoly during my childhood period. 

In reality, we need to learn how to play the GAME of MONEY! Once we know how to play it, making money is easy! It is all about applying the right strategies and we would be successful financially in life. 

The Greatest Money Making Asset

The Greatest Money Making Asset

That Will Generate You Massive Return

So, what is the greatest money making asset that Warren Buffett, Bill Gates, Li Ka-Shing, Robert Kuok and you possess? No…it is not the MBA you are thinking of nor is it the inheritance that some rich kids are having from their parents. 

The asset I am talking about is what we had since birth, something GOD has blessed us all for.

Let me reveal to you that the greatest money making asset that you have is your MIND! It is the way you think that matters most. I still remember that from some books I read a few years ago, I could not believe it that the mind is so important and it could be so powerful. You would probably notice most motivational books convey the same message too. It took me some time to really experience and understands it. 

Yes, it is true… the MIND is the greatest asset of all. 

What & How You Think & Do That Matters

When you think about it, the super-rich have the same neurology and raw material like us. They have the same pair of eyes, ears, hands and legs like us, there are nothing different between them and us at all. The only difference is their mindset, it is what they think, how they think and what they do that matters and that makes the difference in life.   

Successful people often chose to view things positively, they do not believe in failure but treat it as a learning experience. They take actions till they succeed.                         

Remember Prof. Stephen Hawking from Cambridge?  He is an academic celebrity and is well known for his scientific findings. However he has motor neurone disease that is related to amyotrophic lateral sclerosis, a condition left him almost completely paralyzed. Though he could not walk and could only talk with the help of a computer, this is what he said when interviewed in discovery channel. “Although I cannot walk and although I can only talk to you through the computer, but in my mind I am FREEEEEEE!”

So let’s view life positively and make the best out of it by taking action to invest in this asset of ours, the mind!

Mindset – a set of beliefs or a way of thinking that will determine one’s behavior, outlook and mental attitude