Investments decision

One of my Facebook friends posted a question to me on investments. He asked me, "How to gain highest return in investments?" It seems someone had approached him on a Gold investment scheme with the pretext that Gold investment is lucrative and guaranteed. Definitely, gold investment is lucrative because gold is valuable and expensive and it is guaranteed because the price of Gold is stable. Well let us look at the chart on gold price trend to see how true are these statements.

2001-2010 Gold Price trend:

The chart shows that the gold price is in an upwards trend for the past ten years. From USD250/ounce nine years ago, it has risen to around USD1,250/ounce, a 500% increase in value! So the notion is true that the price of Gold is stable, however for a long term period! If we look at short term period price trend (short term means less than twelve months, not necessarily within a full length calendar year), gold price at exit points may be lower than entry points. For example if we look at the first column on the left of the chart, the gold price was about USD280/ounce Jan 2001 but it went down to USD260/ounce a year later. So the notion that the returns on gold is guaranteed does not whole water all the time. It depends on once entry and exit from the market.

I am not an investment analyst nor I claim to be one. However my investment rules are simple:

1. invest and save in something that you know about.
2. buy at low price and sell at high price.
3. use your social and religious beliefs as a guide.

With these rules, I had on the past invested and saved in cash, unit trusts, stocks and real estates. I consider myself as a moderate investor i.e. I can only accept reasonable risk. Most of the times I'm saved, but sometimes people and circumtance deceived me. Take for an example. My first real estate purchase was a house in Bukit Sentosa. The company was impressive, the same company that developed the Pandans: Pandan Indah, Pandan Jaya. Bukit Sentosa was suppose to be the 2nd Petaling Jaya. The master plan was really stupendous: schools, a college, a small township and an industrial area. After close to 15 years, Bukit Sentosa is still a township that I know had not changed much. My rental returns is 4% but the value is half of my purchase price!

Compared to my other real estate investments which are paying off, I have an apartment with 10% rental returns and a condo unit with 11% rental returns, both real property values are appreciating, so 2 out of 3 is considered ok for a moderate investor. This brings me to the house that I'm staying in. The house was built 10 years ago with my own design. The land area is 50ft x 75ft with build up area of about 70%. I handled the construction project from its architectural design, contractor selection, construction contract, monitoring of construction progress, Interior Design and Landscaping. My overall cost was only RM70,262. I'm pleased to share my Project costing and my funding plan below.

My project was called Baiti Jannati, this was planned 2 days before my birthday in 2001.

From the above, although I have consolidated all my savings, my funding was short by RM12,ooo. My savings were not much at this point as I have already invested in the apartment while repaying the Bukit Sentosa house's lost and utilising two cars (the other one for my wife's use). However with careful payment schedule and contruction progress reporting, I was able to settled the shortfall with ease by the time the house was completed six months later. At the moment, I have not officially valued my house, however I believe it is worth RM500,000.

What is the point of this posting, one may ask? My sharing is simple. Afford what you can afford, plan and hope for the best and avoid being deceived. Use the time and avoid being hasty. A 1% doubt may save you a lot.