Wednesday, August 21, 2013

Invest Share or Property


This question is often asked. Invest in share market or real estate property.

Some answer is share, some said property.

We used the statistic data for comparison.

Scenario 1:  Buy a completed house at price RM 400,000.  pay 10% for down payment, the rest borrow from bank with 4.2% interest rate. The house is rent out with 3% rental rate. 5 years later sell the house, how much the investor gain.


Based on Malaysia Housing Price Index, the house price rise between 2 to 12%. The mean of 10 years is 5.6%.

After 5 years the house price rose to $561,000, sell it and reduced outstanding bank loan, thus simple gross profit included rental is $263,460. and net profit after deduct down payment and installment is $106,096. Does this profit return excited you?



Now, we compare what if invest in share market.


Above is past 5 years KLCI performance chart, assume same scenario with initial investment $40,000 and yearly saving $23,473 to investment, plus dividend yield of 3%.


After 5 year, the investment portfolio is appreciated to $310,891 and the net profit is $153,527. Amazing!

From the figure above shows invest in share market is better than property. Bear in mind, there is some risk in investment either share or property.

1 comment:

  1. As a starter in Property Investment, we have to secure what we are doing for our business. We have to focus on what's important and it would be better if we do something else that will help us in this business.

    http://investments-in-real-estate-australia.blogspot.com/2013/08/property-invesments.html

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