PETALING JAYA: While the older generation tend to put their money in properties and blue chip stocks, the younger ones are investing differently through the various investment platforms available.
Traditionally appealing options such as real estate might have lost their lustre among Millennials due to risks seen during the pandemic.
The current property market has made investors think twice before committing due to their reluctance to borrow for investment, according to financial planner Felix Neoh.
“The risk of investing in properties depends on one’s ability to meet the repayment commitment,” he told theSun.
“It is less risky if you buy to stay at the property. But if it is for investment, the risks (involved) are if the price falls, if you can’t get a tenant at the expected rental value, or if you have income concerns.”
Due to technological advancement and continued economic globalisation, the young generation also has a bigger choice of investment vehicles.
“In the past, Malaysians had the opportunity to invest in local stocks (directly or via unit trusts), local property, local businesses (as an entrepreneur or shareholder) or plain vanilla bank (low risk) deposits,” said Neoh, who is director of Financial Planning at Finwealth Management Sdn Bhd.
“These days, we now have platforms offering access to crypto-currencies, peer-to-peer lending, equity crowdfunding, foreign shares and ETF (exchange-traded fund) investing, structured investments, foreign properties and foreign currency deposits, among others, in addition to the common investment options.”
Financial planner Marshall Wong suggests that Millenials do not make property their first investment.
“One may start by allocating 5% to 10% of his income into an automated savings account, and slowly increase the savings as their income increases,” said Wong, who also founded planNERD, a financial blog.
“Just like any investment, property investment requires a high amount of research and due diligence. One wrong move could cost you not only your initial capital, but also future income to pay for the instalments.”
Another financial planner, Ian Wong, agrees that property purchases can be risky in the current economic climate.
“While stocks are still a good option, not all properties make money. In fact, a bad property purchase ends up severely damaging your finances. There are lot more bad properties nowadays.”
However, he pointed out that not all Millennials would dismiss the older way of investing.
“People are now more information-seeking, and thus may be open to newer ideas. For example, a fresh graduate who saw his parents make their fortune in property investments is very likely to still be pro-property investment because his experience has shown him so.
“A similar youth may have seen his parents make their fortune in stocks, so he would (probably) also believe primarily in stocks,”
he added.
Author of financial book Enam Angka Menjelang Dua Puluh Lima, Muhamad Azraei Idros, said high inflation and low salary have made buying property no longer an attractive investment for young people.
“With the new trend of remote societies where they can work from anywhere, many are reluctant to put their limited hard-earned money into a single big-ticket item such as
a house,” he said.
