Buy low and sell high still the gold standard

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Property is still the best hedge against inflation.

Its a no brainer that the best investment strategy is always to buy low and sell high. Developers are always looking to buy land at the lowest price possible and constructing their project with a manageable cost then pricing it as high as the market can accept.

Timing Issue

The only problem is this. We want this ‘buy low and sell high’ concept to happen almost immediately.

For stocks, many look at seconds if not minutes or maximum hours. For property, it’s buy now and sell next year.

What we have learnt after investing in stocks and properties for the last 15 years is that investment is long term. Or else, it’s called speculating. On a yearly basis, there will be fluctuations.

On a longer term basis, the returns are usually above the inflation rate which means that investment is meant to hedge against inflation; staying ahead a little so that the value of the investors money remains the same over time.

Why focus

Instead of asking the usual what to buy or where to buy, we should look at why instead. For example its best to buy unit trusts and forget about them then be pleasantly surprised a few years later.

As for returns, they’re not that awesome compared to property investments, but they are pretty stable.

Similarly for property, instead of asking where, ask why. Are we buying that property for our own stay? Then buying as big a property as possible in an emerging township will be better than putting all our savings into an expensive matured neighbourhood.

For continuous rental income? Then buying into a development with an education theme will be better because education is after all an evergreen industry and the requirements for tertiary education will only increase over time.

Conclusion

The focus on buy low and sell high is correct. The journey to reach the final destination is however going to be very different depending on whom we speak to.

Even auction properties can be a great way to start as these days, there are many more below-market-value properties in auctions.

This article first appeared in kopiandproperty.com