We are faced with various financial concerns on life. Some of the common concerns are:
i. Should we invest? Which investment vehicle? How much?
ii. Can we buy another property?
iii. What sort of protection should we look at?
How can we best optimize our current resources to meet all these concerns and at the same time, meet all our financial goals? Shall we address all concerns at the same time? What is the best strategy moving forward?
Are we overcommitted to a particular asset class? Do we just sell all our loss making investments and concentrate on the oldest investment vehicle such as property? Will this asset help if we need cash urgently?
One of my readers who realized that he needed to get a professional planner to help him out of his dilemma and came to ask me.
From the above, one can see that his major concerns are as follows:
i. Investment: Should he continue to invest, switch or sell the investments in view of current market uncertainty? Would reinvesting the dividends be a good idea?
ii. PTPTN loan (RM63k): Should he settle the amount, now that the government is giving a 20% discount? or should he buy another property instead?
After several discussions on his needs, here is an overview of what he needs to look at:
i. Investments are meant for the long term (3-10 years) before they can yield the desired returns. Even with the conservative risk profile, he needs to invest in more than one particular asset class. He can try to diversify among various asset classes which is the main foundation of successful investing. Property may be the oldest investment vehicle but it is not a liquid asset. This asset may be hard to liquidate in an emergency , it normally takes 6 months to 1 year to liquidate. Working towards long term objectives with the least amount of risk is the true power of successful investing. He would need to look at committing to a higher savings ratio as he is saving only 2.9% of his income currently.
ii. As for PTPTN loan, he should take advantage of the 20% discount and settle the amount in full. By doing so, he can also take pride in the knowledge that she has contributed to society as there are others who need such loans.
Apart from the above, he should look at risk management and estate planning. She needs to cover his liabilities as all the properties are mortgaged. He should write a will so that his estate will be distributed according to her wishes. By doing so, he can obtain peace of mind should any unexpected life events occur.