Vacant Land Vs Cash

Life with cash in hand is fantastic; you can make lot of wonders when you have cash. But for me keeping cash in Fixed Deposit is ready unhealthy. At all time I will convert it into vacant land if I assure I don’t need the money anymore. My money is my employees that to works extra hours for me and I’m not going to throw them away unless they have reach optimum value.

Land is fantastic if you have it under your investment porfolio. The land market is imperfect. The demand is always there while the supply is getting less. As I always say, every year our Malaysia government will make budget announcement on September. During the announcement government mainly will focus on development of infrastructure in whole Malaysia namely schools, road, new township, hospital, airport and a lot more. Who is the main beneficiary of the growing economy and the yearly budget? I can assure you that, its landowner. So as long as you hold a land bank inside your portfolio, definitely your chances hitting jackpot is there. It’s a matter of time. When this hit, the return will hit more than few hundred times of your original investment. Like what happen to my land at my home town known as Sarikei. The small town is famous of pineapple in Sarawak. When I started buying the land at year 2004 it cost me average cost of RM10K per acres @ RM 0.23 per sf. Today I can assure than the value has appreciate to RM30K per acre @ RM0.69 per sf (+300%). The value will continue to stable and gradually increase throughout time. Remember “I’m 30 yrs old today, assuming I keep the land till 55 years old, what value it will be? Time is my best friend now. For those who reach above 40’s, time resources actually against them or in other words, its tough to regain back their healthy financial statement.

Cash is good as it’s very liquid. But holding too much cash is very unhealthy for young people financial life. A lot of people keep cash in Fixed Deposit which generating return 2%-3% maximum. My question is what is 2%-3% mean to you? Of course it’s better than nothing. But if you are young it’s really going to hurt your personal financial statement. While your money only earned 3-5% per annum for you, your another side of world is having losing –10% which is inflation. In return your financial health is running at loss about -7%. The more you work the more loss incurred. Do you want this keep this kind of business?

Refer to the “Return Assumption” table is as below;

From the table above, clearly shows that, holding cash is really bad especially young generation as their money is getting tough to be kept and multiplied. Land owner might not need to work till age 55 but in general cash keeper need to work extra hard for life to keep their life style.

My habit of investment in property is “all-in” strategy. Means after I fully insured myself on my life insurance, medical cards and keep some emergency cash I fully invested into property especially vacant land and some rental property. At all time I would prefer to stay invested my money instead of keeping cash.

Just imaging in year 2008 if you hold RM100K, I think you should agree with me that last year was the worst year as our “Real Value” really depreciated about 20%-30% due to rising oil price which lead to overall escalating living cost. This year your RM100K will be still RM100K on paper but the “Real Value” has drop to maybe RM80K or more depending on your life style. My another question which I love to ask my business associate is that what you can do with your RM100K nowadays? Last year you might talk a bit louder because you have RM100K “Real Value” but this year I think you better think twice.

So do you know how to make your decision now? But a lot of time I found out that general investor “trying” not to understand the above table. Prove me, that I’m wrong!

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