Sep 26, 2023

Cory Diary : Expensive Ventures

When embarking on our investment journey, we often experience moments of elation, whether from impressive returns on investments, a bolstered savings rate, or an unexpected inheritance. It's during these times that we may be tempted to dive into new ventures that could potentially be wasteful. In this article, we'll explore a few common pitfalls to avoid as you navigate your investment path.

1. Overseas Property Investments

Investing in overseas property can be an enticing prospect. However, before taking the plunge, it's crucial to consider the opportunity cost. Suppose you inject a substantial $300,000 into an overseas property investment. This could yield an annual income of, let's say, $15,000. Now, imagine if you had instead invested that $300,000 in a dividend stock, which could potentially generate a 5% yield. In this scenario, you would have earned $15,000 annually without the additional complexities of property management.

Moreover, if you remain committed to this venture for a decade, you would have missed out on $150,000 in potential dividend income. This calculation doesn't even account for the compounding impact, forex risk, or potential capital loss associated with property investments. So, it's essential to weigh the pros and cons carefully when considering overseas property ventures.

2. Premature Retirement

Retirement is a significant life milestone that many aspire to achieve after years of diligent work. While it's natural to dream of an early retirement, it's crucial to ensure you are financially prepared. Premature retirement, when not adequately funded, can have adverse consequences.

Consider an annual savings income of $30,000. Over the course of a decade, this amounts to $300,000 in total savings. However, if you had continued working and investing during this period, your net worth could have grown even further. Assuming stable income and returns from your investments, this $300,000 could potentially grow to $400,000 or more in missed net worth after a decade.

Retirement should be a well-planned and financially secure phase of life, where health and well-being take precedence. Rushing into retirement without adequate funds could lead to financial stress down the road.

3. High-Risk Dividend Investments

In the realm of dividend investments, stability and peace of mind are paramount. However, some investors are tempted by high-risk opportunities, such as foreign REITs or ventures in unfamiliar territories. While there's potential for higher returns, these investments come with added risks.

Foreign investments, especially in areas with different economic conditions and currency fluctuations, can be unpredictable. If these ventures don't align with your overall investment strategy, they can set you back significantly when things take an unexpected turn. The hit on your capital assets can be substantial, impacting your income for years to come.

In conclusion, while there may be other pitfalls in the world of investments, these are three key areas to watch out for. Investing wisely and staying true to your financial goals can help you achieve long-term success. Remember, it's essential to seek professional guidance when making financial decisions and to take full responsibility for your choices.


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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

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