How Do I Accumulate Profit of 850K in 7 Years?

Our guest writer today, Kelvin would like to share his experience managing his personal finance. He was lucky that he was forced into an insurance plan which help him to create an investment which generated 850k of profit. We would like to thank Kelvin for sharing his experience and we would like to invite more readers to share theirs in our blog.

Read on to learn more from Kelvin’s story:

When I first started working at the age of 21, my father forced me to buy an endowment insurance policy, as a forced savings mechanism so that his son will not squander away all his salary. :)

This was back in the early 1990’s, endowment policies were all the rage as Investment Linked Policies were not yet introduced to the market. With the salary that I earned, I could only afford a policy that matures after 12 years and the projection was 50k (including bonus).

So through my twenties, the insurance and EPF were the only ‘investments’ I had. Along the way, someone passed me Robert Kiyosaki’s Rich Dad Poor Dad, and that book influenced me significantly about investing, especially property investing. So I decided that upon the maturing of my endowment policy, I will use the proceeds to invest in my first property.

I had a couple of friends living in Pantai Panorama, and whenever I visited them, I noticed that it was a good location, quiet and a lot of expatriates. After spoken to some of my friends who were property agents, the one room and studio apartments were hot at that time and very difficult to rent because there were abundant of potential tenants.

Hence, when the insurance matured, I put a down payment of 25k and bought the one room (fully furnished) unit for RM200k (this was in year 2003). The rent from my tenant was RM 1800, which more than sufficient to pay for the bank loan as well as management fees/ sinking fund.

With the remaining 25k in hand, I wanted to buy a second unit. But none of the banks wanted to give me a loan for a second home. Even after I showed them that my first home was paying for itself.

So my next option, I bought the second unit at Pantai Panorama under my sister’s name. I made a lawyer’s agreement with my sister in order for her to be entitled of a certain portion of the profits should the condo be sold.

Thence, I own two condominiums which self sustaining through the rental and kept them for seven years. In year 2010, I sold both properties for RM450,000 each. Calculating my initial capital was 50k, deducting the bank installments and management fees which were paid by the tenants, the accumulation of profit was 850k.

Partial of the profit, was a token for my sister for her initial assistance, and she was very happy about it.

This is my story of how I was forced into my first endowment insurance policy, and the tremendous value and insight which I gained from Robert Kiyosaki’s Rich dad Poor Dad.