Market Risk and Opportunity Analysis

In today market, where global economy slow down and melt down has caused great uncertainties to our economy, to our jobs and even to our investment return. This inevitable creates the best opportunity for those who has holding power and greatest risk for those who do not have much asset backing, no family backup or no cash reserve plus no valid and qualified skill sets to re-enter the job market.

 

This week, Jenny Oh - Senior finance broker and financial advisor from Capital Wealth Finance presents the following to you:

- the risk and opportunity analysis,

- what can be done to help valued clients liked you to achieve your financial goals with minimum disruptions and

- ensure smooth sailing through in today turmoil economy.  

 

THE OPPORTUNITY

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 I have witnessed and have helped many clients this 2012 to buy undervalued property and has made $ for them at purchase time. There is no need to wait for capital growth as $ and profit is made instantly. The profit made is ranging from $80K to $200K range.

This has showed to our investors and my valued clients that the climate is in favour for the buyers especially cash rich one ->

1.    Not only they can take advantage of the price entry to buy quality house at lower price,

2.    But they can have the lowest interest rate – commercial rate starts as low as 6.24% with NO REVIEW and residential can be as low as 5.39% - these are the low rates you pay to buy undervalued quality property in good located areas.

 

The implications - The return of investment is achieving around 6% to 6.5%, hence client achieved neutral gear that does not cost too much to hold on the assets but will achieve capital growth on the investment in times to come.

Also there is no tax to pay nor much to deduct – the asset just self funded itself, just nice for the risk averse investors or closed to retirement people.   

 

THE RISK

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Every opportunity and investment comes with risk. Hence risk management is crucial to your investment success.

The group that will severely impacted by the market will be those who has :

1.    very little savings,

 

2.    very highly geared,

 

3.    very little family support, and

 

4.    not much skill or qualification to look for alternatives.

This is made even worst if you are the only one who brings in the monthly income to support the daily expenses for your family.

 

The other risk - investors buying at the wrong location which has slow or no growth at all for prolonged years – this will be worst if your rental return cannot cover the cost of holding the assets.

Hence once you cannot hold this type of assets due to :

-      high vacancy loss as market get worse or

-      tenants refuse to leave and not paying you rent due to hardship or

-      you lost your job due to illness or injury or retrenchment, then even you have decided to sell the investment property, you may still owe the bank money as the sale cannot cover the cost and loan.

-      You will have to force to declare bankruptcy due to decline in property value in recent times and in certain areas.

The hard earned wealth you acquired over the years will soon be vanished.

                                                                                                                                                  

THE ACTIONS YOU CAN TAKE

To minimise all the above identified risks, one can try to save more for rainy days or reducing non tax deductible lifestyle debts. The other way is to look for mortgage protection that offers

-      unemployment benefits,

-      land lord insurance that cover rental repayment up to 15 weeks when the tenants defaulted due to hardships or death or just refused to pay you and not vacating your property,

-      pay 85% of your income till 65 due to sickness or injury. The premium can be ta deductible. This is important to your wealth creation journey especially if you are the sole person who works now and brings income to the family  

 

This will give you time to re-enter the job market, to pay the bills, to look for alternate tenants or sell the house and avoid bank foreclosed your property.

 

Standing together with you in good and difficult times – CWF can source various Protection Insurance that covers Income Protection, Trauma and UNEMPLOYMENT benefit for you. Land lord insurance that covers rent default up to 52 weeks.

This gives you the assurance and peace of mind that you and your family are always taken care for at times of uncertainty and crisis that you did not cater for.