The same property investing mistake made by smart people

Plenty of smart, successful people with cash to invest are currently refusing to invest it. Upon digging further, usually they will explain by saying something along the line, "You know, I have this cash sitting in my savings account and I know how important it is to invest, so I can take advantage of compound returns. But the property price has been skyrocketing, forming a bubble and the bubble is going to burst soon, so I'm gonna wait." More often than not, they will further use the not too distant 2007 United States Subprime Mortgage Crisis, which eventually led to 2008 Global Financial Crisis, as an example to justify their claim.

On the surface, this train of thought seems pretty reasonable based on some basic facts about the current property market:

• Generally speaking, housing price in Sabah has been increasing since 2009.
• It just keeps going up, reaching a sky-high level.
• It can't go up forever.

A rational decision-making process would take true facts about the market into consideration. The problem, however, is when you throw in one final statement to that list: "It's going to crash soon." After all, it's pretty reasonable to think "what goes up must come down".

Let’s be absolutely clear - this is not a fact. The belief or assertion that the property market will crash in the foreseeable future is nothing more than a belief. To be more accurate, it's merely a speculation.

No one has the crystal ball and be able to predict what the property market will do next. It's worth repeating: anyone who thinks they can do it is speculating, guessing, or forecasting.

By definition, if there is a bubble, it will eventually burst. If it doesn't burst, then it wasn't a bubble at all. The point is that we don't know exactly when the bubble is going to burst. The fear that "eventually" means "tomorrow" keeps many from taking action to invest in property market.

What happens when in fact there isn’t any bubble at all? If that's the case, aversion to loss prevents people from simply taking the cash they have sitting on the sidelines and investing it into the property market, and potentially incurring massive opportunity costs because of missing years of potential market growth. When they eventually do buy in, they will be buying at an even bigger peak than they thought they were avoiding.

Disclaimer: Information provided in this article is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute personal financial advice. Remember, the value of any investment can go down as well as up. Before acting on any information to make investments or acquire or dispose of financial products, you should consider seeking independent financial advice that is tailored to your needs.