Investing in property – a must for young adults?

The sooner is the better for property investment, which is why Gen Ys should begin investing early.

 By MANGALESRI CHANDRASEKARAN

Millennials are encouraged to learn about property investment and better understand the industry prior to investing.

If you are aged between 18 and 34, then you are categorised as millennials, also known as Gen Y. At this age, it is a good time to consider investing in property.

Investing in property is certainly not easy, and most youngsters hesitate to invest due to several uncertainties. Long-term investing is challenging and needs a huge amount of patience and knowledge, but young adults have time as an added advantage.

The key benefit of property investment is increasing financial leverage. The value of most properties increase yearly, which makes it advantageous to invest from a younger age. A person who invested in their 20s is likely to be able to maximise capital appreciation as they allow the price to appreciate for a longer duration (provided their objective is to get long-term gains), compared to the investment made by a person nearing retirement.

Moreover, an investor’s age plays a role in determining the risk a person can withstand. The younger the person is, the more risk they might be willing to take on, compared to someone who is nearing retirement as they are at a different stage in life and might look at risk-free or lower-risk investments (unless they are a seasoned property investor).

Investing in property also means adding assets. When paid in full and managed well, the investment will remain an asset, while providing passive income monthly and capital appreciation. Kept for a longer time, this asset can also be passed on from one generation to the next.

Investing at a young age is obviously not an easy decision to make, but it is not impossible as well. With the right mindset and plan, it’s the best age to begin.

For a successful investment, young millennials should:

• Be in the know: Being tech-savvy is another advantage for Gen Ys, as there are apps, online courses, financial and educational property websites, blogs and social media, which offer valuable guidance. What matters most is getting your research done and get the right knowledge base before venturing into property investment. You should read up on books by financial and investment gurus, and attend talks and forums to get invaluable insights from property experts and investors. Learn from their mistakes and avoid the pitfalls of property investment.

• Consider a shared investment: Shared investment with a person who has the same passion or perhaps with parents or siblings is a bold move. Youngsters mostly fear the huge amount needed for their first property, which is 10% of the property value. Having a shared investment will ease the burden and make investing more appealing, while managing the risk to a certain extent.

• Buy to generate income: There are some young adults who are considering buying property for their own use, but the best investment is to rent out the property. The investor would get capital appreciation and monthly rental at the same time and it’s not necessary to fork out money each month. So it’s better to let tenants pay for your investment.

• Keep risks under control: Millennials should consider investing at a younger age, since that’s the best time to acquire a property and make the most out of their money and youth. As much as it is important to invest, it is also equally vital to keep the risks under control.  But it also depends on risk appetite, interest and financial management. For initial investments, choose an affordable property and always have a Plan B in case of emergencies. Have the “trading up” mentality, where you start with lower-priced properties and move up as you continue to invest.

• Choose the right property: To have a successful investment, it is important to choose the right property which will grow in value and attract potential tenants. You could start with smaller-sized units such as studio units and SOHOs priced below RM500,000. Of course, the location plays a major role. So it is best to evaluate the surrounding areas, the growth indicators and upcoming infrastructure, existing and future amenities, the developer (if purchasing new properties), and so on.

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