Does not support real estate to become rich
Background of the new policy
According to Bank Negara Malaysia (BNM)'s latest guidelines, the maximum period for the cash withdrawal portion of a refinancing loan has been shortened to 10 years. This measure is aimed at controlling household debt and curbing speculative activity in the real estate market [[❞]] (https://loanstreet.com.my/learning-centre/10-year-limit-on-mortgage-refinancing-cashout) [[❞]] ( https://www.iproperty.com.my/guides/bank-negara-malaysia-s-lending-policies-how-do-they-affect-you-4793). Previously, homeowners could refinance a property with a loan term of up to 35 years, but the new policy requires any cash withdrawal to be repaid within 10 years, thereby increasing the monthly repayment amount and further increasing the financial burden on borrowers [[❞]] (https://loanstreet.com.my/learning-centre/10-year-limit-on-mortgage-refinancing-cashout) [❞] ( https://ringgitplus.com/en/blog/Debt-Management/New-BNM-Guidelines-Will-It-Reduce-the-Debt-Burden.html).
According to Bank Negara Malaysia (BNM)'s latest guidelines, the maximum period for the cash withdrawal portion of a refinancing loan has been shortened to 10 years. This measure is aimed at controlling household debt and curbing speculative activity in the real estate market [[❞]] (https://loanstreet.com.my/learning-centre/10-year-limit-on-mortgage-refinancing-cashout) [[❞]] ( https://www.iproperty.com.my/guides/bank-negara-malaysia-s-lending-policies-how-do-they-affect-you-4793). Previously, homeowners could refinance a property with a loan term of up to 35 years, but the new policy requires any cash withdrawal to be repaid within 10 years, thereby increasing the monthly repayment amount and further increasing the financial burden on borrowers [[❞]] (https://loanstreet.com.my/learning-centre/10-year-limit-on-mortgage-refinancing-cashout) [❞] ( https://ringgitplus.com/en/blog/Debt-Management/New-BNM-Guidelines-Will-It-Reduce-the-Debt-Burden.html).
personal opinion
I personally don't support getting rich through real estate. The main reasons are as follows:
I personally don't support getting rich through real estate. The main reasons are as follows:
1. **Insufficient Liquidity**: Real estate investments require a large amount of initial capital and are slow to cash out in case of an emergency. This lack of liquidity poses many risks, such as an inability to respond to sudden financial needs in a timely manner.
2. **High risk**: The real estate market is highly volatile, and policy changes will also directly affect property values and return on investment. New refinancing policies have further exacerbated this uncertainty and increased the risk of investment.
3. **The attractiveness of the stock market**: In contrast, the Malaysian stock market has performed well in the past year and has become one of the most popular investment tools for investors. Stock market investments are highly liquid and can respond more flexibly to market changes and individual financial needs.
Personal analysis
1. **Specific risks of insufficient liquidity**:
- **High cost of holding**: Real estate investments require not only purchase costs, but also maintenance costs, taxes, insurance, etc. These holding costs can put pressure on working capital, particularly when rental income doesn't cover these costs [[❞]] (https://www.iproperty.com.my/guides/refinancing-house-loan-in-malaysia-71524).
- **Difficulty in monetizing it**: When the market environment is poor, real estate may take a long time to monetize, and when capital is needed, it may be forced to sell at a lower price than the market price, causing financial losses.
- **High cost of holding**: Real estate investments require not only purchase costs, but also maintenance costs, taxes, insurance, etc. These holding costs can put pressure on working capital, particularly when rental income doesn't cover these costs [[❞]] (https://www.iproperty.com.my/guides/refinancing-house-loan-in-malaysia-71524).
- **Difficulty in monetizing it**: When the market environment is poor, real estate may take a long time to monetize, and when capital is needed, it may be forced to sell at a lower price than the market price, causing financial losses.
2. **Specific manifestations of high risk**:
- **Market Volatility**: The real estate market is greatly affected by policies, the economic environment, and the relationship between supply and demand, and prices are highly volatile. New policies, such as BNM's refinancing restrictions, may have a significant impact on market sentiment and prices [[❞]] (https://www.iproperty.com.my/guides/bank-negara-malaysia-s-lending-policies-how-do-they-affect-you-4793).
- **Policy risk**: Changes in government policies, such as loan restrictions, tax policies, etc., directly affect the real estate market. For example, BNM's policy is aimed at curbing speculation, which may result in lower market demand and lower prices [[❞]] (https://ringgitplus.com/en/blog/Debt-Management/New-BNM-Guidelines-Will-It-Reduce-the-Debt-Burden.html).
- **Market Volatility**: The real estate market is greatly affected by policies, the economic environment, and the relationship between supply and demand, and prices are highly volatile. New policies, such as BNM's refinancing restrictions, may have a significant impact on market sentiment and prices [[❞]] (https://www.iproperty.com.my/guides/bank-negara-malaysia-s-lending-policies-how-do-they-affect-you-4793).
- **Policy risk**: Changes in government policies, such as loan restrictions, tax policies, etc., directly affect the real estate market. For example, BNM's policy is aimed at curbing speculation, which may result in lower market demand and lower prices [[❞]] (https://ringgitplus.com/en/blog/Debt-Management/New-BNM-Guidelines-Will-It-Reduce-the-Debt-Burden.html).
3. **Advantages of the stock market**:
- **High Liquidity**: The high liquidity of the stock market allows investors to trade assets more quickly to meet short-term capital needs [[❞]] (https://www.iproperty.com.my/guides/refinancing-house-loan-in-malaysia-71524).
- **Diversified investment opportunities**: Compared to real estate, the stock market provides more investment options, and investment risks can be diversified through different industries and companies.
- **Relatively low transaction costs**: Stock transactions are generally less expensive than real estate transactions, including buying and selling fees and holding costs.
- **High Liquidity**: The high liquidity of the stock market allows investors to trade assets more quickly to meet short-term capital needs [[❞]] (https://www.iproperty.com.my/guides/refinancing-house-loan-in-malaysia-71524).
- **Diversified investment opportunities**: Compared to real estate, the stock market provides more investment options, and investment risks can be diversified through different industries and companies.
- **Relatively low transaction costs**: Stock transactions are generally less expensive than real estate transactions, including buying and selling fees and holding costs.
#### Conclusions
In the current economic environment and policy context, the high risk and lack of liquidity of real estate investment make it no longer an ideal tool to become rich. In contrast, the stock market's performance is more stable and flexible, and it is worth considering as a major investment option. The good performance of the Malaysian stock market over the past year further proved its superiority as an investment tool.
In the current economic environment and policy context, the high risk and lack of liquidity of real estate investment make it no longer an ideal tool to become rich. In contrast, the stock market's performance is more stable and flexible, and it is worth considering as a major investment option. The good performance of the Malaysian stock market over the past year further proved its superiority as an investment tool.
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