Biggest Mistake in Investing

I made a lot of mistakes in my investing journey. The biggest mistake in investing that I made numerous times was buying a very expensive home.

Malaysians and Singaporeans alike, and I would say most Asians and even Americans, homeownership is everyone’s dream. Either you are trying to fulfilling your American’s dream or Malaysian dream, owning a home is a must in your working life.

After graduating from medical school back in 2001, the very first thing I did after saving up MYR15k ( mind you that I was earning only MYR1800 per month that time) was buying a house.

My mum said you would never become a real adult if you did not own a house. My mum gave me a lot of good financial advice when I was young but I still think this is the worst advice you could possibly give to your children.

Home-ownership- Big burden to you financial health

Why? Because owning a house made a lot of people becoming a slow- crawling turtle in terms of building up their wealth. I decided to buy a terrace house in Simpang Ampat Penang which set me back for MYR170k. Asians like to buy houses because home-ownership gives us a sense of belonging.

I would prefer you to start saving a few more years before buying your first home. There are too many hidden costs of owning a house.

I bought my second house when I moved to Penang Island back in 2011. After saving by side hustling, doing locums and saving 50 percent of my government pay, I decided to buy my second home priced at MYR1.2 million.

If I were to invest all my savings in an index fund back in 2012 after working in a private hospital, I would have retired back in 2017.

I never learned my lesson. People around you always push you to upgrade and buy a bigger home when you earn more.

I made my final biggest mistake by buying a bigger house in 2017 because I thought I wanted a landed property in Penang Island.

Think twice before buying your first home

I have summarized and made a list of all the negative points of owning a big house

• hidden costs of owning a house is way too high
• eventually your children would grow up and you will be downgrading /downsize your house
• it is too illiquid and difficult to sell when you need the money
• you will be paying your housing loans up to 25 to 30 years if not less and the interests might make your house 2-3x more expensive that your purchase price
• It should be subject to the fortunes of one state , one city, one town and one neighborhood! Taman Tambun house costs me MYR170k back in 2001 and a landed semi D in Pulau Tikus costs me more than MYR1 million. It is really mind blogging and I was wondering what is so special about this neighbourhood? Am I going to live next door to Bill Gates or Jack Ma?
• it is not easy to rent out your second home in Malaysia even though you live in Penang. Tenants would most probably damage your house before they move out

I am now a smarter person. I sold my first house, settled my second house mortgage, and hoping to do for my third house soonest possible.

If I can put my money MYR10k every month in an index fund, I will be sitting at a portfolio of MYR 1 million after 6-7 years ( historical return of S&P 500 from Jan 2012 till Jan 2018)

The only benefit of buying a big house in Malaysia /Singapore is trying to impress your family members how rich you are. I was intending to do so and I had learned my mistake.