KUALA LUMPUR (June 22): Buying a house is one of the biggest purchases many of us will make in our lifetime. So, it pays to start planning early. You will need a “financial roadmap” towards your first property purchase.
The real cost of buying a home
When buying a house, it is essential to consider more than just the downpayment. Take a moment to evaluate your financial situation and calculate the budget required for the purchase.
Besides the house price, there are additional costs to bear in mind. These include renovation expenses, furnishing costs, ongoing maintenance fees, utility bills, and property taxes. By factoring in these expenses, you can have a comprehensive understanding of the total costs associated with owning a home. You should also be aware of unexpected expenses that could arise from unemployment or unforeseen medical bills.
All these “unexpected” outflow of funds should be covered by at least six months’ worth of living expenses. Ideally, these funds should be placed somewhere low-risk, liquid, and interest-earning.
How do you start building an “emergency” fund? Check out our official investment partner StashAway – an investment platform designed to build and protect your long-term wealth. StashAway offers a suite of personalised investment solutions based on your risk preferences, goals, current financial situation, and investment experience.
One of StashAway’s cash management solutions is StashAway SimpleTM. It offers a projected return of 4.1% p.a. with no fees, no lock-in period, and no cap on the amount that can earn the projected rate.
You can get a complimentary cashback of RM30 when you start your investment journey with StashAway Additionally, EdgeProp START will reward you with an additional cash bonus of RM100 when you complete your goal of purchasing a house.
Read also:Do You Have an Emergency Fund?
Have a savings plan and time horizon
Knowing how much time you have to save up for your first property purchase will inform your savings and investment plan. Estimate the amount you need to set aside for a downpayment, your monthly mortgage payment, how long you have before realising your goal, and how much funds you’ve saved.
“It is important to know your time horizon as different goals have varying time horizons. This affects the risk you can stomach. If you plan to make a downpayment in five years, you can afford to take on slightly higher risk as you can ride out short-term volatility in the stock market,” said StashAway Malaysia country manager, Wai Ken Wong.
Investing your way to your first home
Now that you know what you’d require, you can make your money work harder for you by exploring investment options beyond fixed deposits and unit trusts. There’s no one-size-fits-all investment strategy since it depends on your individual goal and risk appetite.
If you have a medium-term horizon of three to five years, consider investing your funds in a globally diversified portfolio that allows your capital to benefit from an appropriately higher level of risk and return over a longer period. StashAway’s investment portfolios are diversified across multiple asset classes and geographies, allowing you to customise an investment plan at a risk level that you prefer.
Use the StashAway app to get a personalised investment plan for your first home purchase. Start by creating a goal through their Goal-based Investing Portfolio, and you’ll be prompted to input some financial information, such as how much savings you already have, the size and location of the house you’re planning to buy, and when you intend to make your purchase.
Alternatively, you can find out median prices of properties across different locations to determine the goal target for your dream home through EdgeProp’s resources. New launches featured on EdgeProp START range from RM250,000 to RM1,500,000 onwards.
In the StashAway app, just key in the exact goal target, timeline, and the savings you’ve set aside, and an algorithm will personalise a suitable investment plan for you based on the data provided. You can then review the recommended plan and make adjustments as necessary based on what you’re comfortable with.
A time-tested strategy for achieving your medium to long-term financial goals is dollar-cost averaging. Instead of trying to time the market by investing a single lump sum at once, you can make consistent contributions to your investment portfolio over time, so that you’re not vulnerable to whatever the market condition is when you invest.
Spreading out your large deposit helps to manage risks and build sustainable habits that will eventually enable you to reach your financial goals successfully. Learn more about the value of dollar-cost-averaging here.
Source: EdgeProp.my
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