June 24, 2011

How do you make money when there’s a property bubble?

There’s a definite price bubble growing in the real estate arena in Klang valley to say the least. With the reports from various financial dailies showing strong or overwhelming growth in the nation as well as new and bold land acquisitions by several large developers, things are definitely gearing up for 2011. Without doubt, more prime located properties will be launched, and the prices are definitely on the upside.

As a matter of fact, just the other day, I was at an auction for a residential property auctioned for RM500K. To my surprise, it looked more like a night market than a high court auction. Never have I seen so many people so anxious to plough their money into properties before. There were more than 30 people in the courtroom! What baffled me was that most of the properties in fairly good locations were bid up and bought at above market value prices! The property auction I attended went for RM800K. For the life of me, I cannot understand the rational behind their actions.

I also experienced and heard of similar cases in the secondary market. Just the other day, I stumbled across a good deal in the market. It was a small residential property in USJ that was going for a reasonably good price. When I showed up for the viewing, there were more than 15 prospective buyers and real estate agents cramped up in the living room of the unit! From my observation, property prices in several hot spot areas such as Taman Tun Dr Ismail, Damansara, Bangsar, Subang, Petaling Jaya, USJ and Kota Kemuning, have increase by an average of 40% to 60% in the past seven months (since May 2010).

It’s true, the market is hot and it will only get hotter. Bank Negara’s implementation of the 70% capping on the loan-to-value (LTV) was in reaction to the tremendous increase in real estate transactions in the past six months. However, the question is, will it be enough to slow down the current market momentum?

The question one should ask is “What can a person do, in a situation like this?”

June 20, 2011

Comparison of Gold Savings Account

Gold Savings Account
Updates (as of 6 Nov): New price difference % calculated and updated data in table.

In times of hyper inflation or economic turmoil, people are turning to gold investments as a safe heaven. For the past few years of high commodity prices, gold has been a darling of investing communities. Various vehicles of gold investments, such as gold ETF, gold bullion, gold future and gold savings accounts have been launched to attract new customers who want to ride the rising waves of gold investments.

For small time investors in Malaysia, one practical way to kick start your gold investment is via gold savings account. It is basically a deposit account where the money you deposit is used to purchase units (grams) of physical gold. With gold savings account, you do not earn interest but you might profit from the rising gold prices. Of course, with any other investments, there are terms and conditions; and associated fees attached to this account.

Currently, there are 5 commercial banks in Malaysia that offer gold savings account as below:
  1. Maybank Gold Investment Account (MBB GIA)
  2. Public Bank Gold Investment Account (PBB GIA)
  3. CIMB Gold Deposit Account (CIMB GDA)
  4. UOB Gold Savings Account (UOB GSA)
  5. KFH Gold Account-i

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