@BBCWatcher U must be amazed at Asians' love for real estate... I wonder how u sharing ur very reasonably sound thoughts will get smacked here...
No, not really. First of all, Asia is a big, diverse place, with diverse interests and predilections, including investment interests and predilections. Some people are "gold bugs," some love commodities, etc. I just don't think you should be "monogamous" when it comes to investing, that's all. (To your spouse, yes, definitely.) I don't have a problem with real estate, for example, except when overdosing on it, particularly if it's only in one country or territory. Indeed, I invest to some degree in the stuff.
I also happen to believe/forecast that HDB BTOs are still great deals (high probability).
The interest rate backdrop + Singapore stability in SEA region definitely helped alot on the SG multi-decade property bull market, and prob more so than the local stock market.
Sure, but that's nothing special. Dutch tulips enjoyed a fabulous boom.
Beanie Babies, Internet domain names, collateralized debt obligations (CDOs), baseball cards, cowry shells, cryptocurrencies (a few), spices, silk, pet rocks.... It's a long list.
Btw, I think the very recent happening on the financial market in Argentina showcase the detriments of being overly concentrated in one's own home country market for investment purpose.
True. I suppose we can quibble about what the "correct" percentage is, but surely 0% global diversification is the wrong answer...right? (Assuming material assets to invest. If total household assets to invest are relatively low or lower, CPF is likely *the* answer, for example.)
Talk about properties profit recently. Can take an example of Normanton Park. I know one guy bought it ~500K at 2006 (not at the bottom). Only have to pay 50K first.
Yes, a 90% LTV ratio was legal before February 20, 2010, with a willing lender (not necessarily a given). That's now illegal and has been for almost a decade. The maximum LTV is currently 75% (with an HDB exception), and then only for one mortgage. Thus, with 100% confidence, we can predict that
today's borrower will not have the same experience that borrowers had in the past. We aren't always able to have such clarity in a financial forecast element, but in this case we do.
Rent it out for 12 years. Monthly rental enough to pay the bank. Fast forward 2018, enbloc (not at the top, other place enbloc even higher after this). Pay back the bank, add up still got 1.5M. 3000% in 12 years. Good or not?
That's not the actual return -- the return net of all costs -- and before deciding whether it's "good" or not, the actual net return must be known. At a minimum you've missed initial outfitting, refurbishing, maintenance and repairs, insurance, condo fees, property tax, and (probably) income tax on the taxable rental income. There are some other typical line items, but that list is a start.
Yes, I know it's fashionable to tell tales of fabulous real estate-fueled riches. B.F.D. Let's not exaggerate -- shouldn't the tale be impressive enough if it's real? -- starting with some basic, at least minimally realistic accounting.
Hillary Clinton (former Arkansas First Lady, former U.S. First Lady, former U.S. Secretary of State, former U.S. Senator from New York, former Democratic Party nominee for President of the United States, popular vote winner in the 2016 U.S. Presidential election) famously turned US$1,000 into US$100,000 within 10 months betting on cattle futures in 1978-1979 -- yes, seriously. All evidence suggests that it was a legitimate, legal result. That's a 100-fold (9900%) pre-tax nominal return within a mere 10 months. Assuming she was in a ~33% income tax bracket, that would have been about +6600% nominal net of all costs. So what? No, you shouldn't bet 80% of your household wealth on cattle futures. Hillary Clinton didn't do that -- it was US$1,000 in late 1978 -- and (wisely, many would agree) she stopped gambling.
I'm also not opposed to a big bet, provided the bet is calculated and well considered, the fallback scenario (i.e. the bet fails) is still a decent or better situation (genuinely already wealthy people have an advantage here), and the bet is not repeated or expanded unless those same two conditions still hold (and probably not even then -- there's certainly no
obligation to make a big bet). One not-too-extended family member made a big bet, once, and he happened to win as Forbes defines it. (Important: Forbes really doesn't define winning. For example, I don't know what his "happiness score" was.) Repeating what he did, no, you're definitely not going to win -- even he didn't dare attempt a repeat performance in the same way -- so he'll likely be unique in history. As we all are in our own ways, I hope.
Same way some people think they have an eye for spotting hundred-bagger stocks. If it's so easy, I wonder why they still have a day job that they hate.
Exactly, and there are plenty of such stories, too. Hillary Clinton's story included -- cattle futures in that case.
The world's worst investments (or "investments") -- casino gambling, for example -- still produce a few statistically long tail, outlier winners.
Somebody has to win the poker tournament, once anyway -- along with the house, of course, which always wins.(*) And oh how we (especially the casinos, the property agents, the brokers, the cryptocurrency exchanges, the penny stock pushers, etc.) love to tell the outlier stories.
Anyway, I have no problem with property as such. Just don't over do it, OK?
(*) If you've been paying attention you might have noticed that Warren Buffett has invested significantly in real estate...in the "house," in the casino as it were. Berkshire Hathaway owns the largest residential real estate
agency in the United States: HomeServices of America. In 2018 HomeServices of America closed 346,629 home sales, more than any other U.S. real estate broker. He's also expanding internationally and already has real estate agencies in the U.K. and in Germany. I don't think you should copy Buffett (if that were even possible -- it's not), but "isn't that interesting?"
