Should I invest in unit trust or property especially during the financial crisis?

Property is always the hedge against inflation as the property price is always increasing. But the of course there are cons/ disadvantage of investing in property.

First, property is not liquid. When especially you need cash immediately, you need to find agent or you have to look for interested buyer. This is not easy when the location and market value is not favorable. When you cannot sell the properties, you still owe the financial institution and pay interest in monthly basis. But when you invest in unit trust, you can sell back to the unit trust company and redeem your cash in the next few days. But, if the market is not favorable, you still can keep the unit and keep on top up to gain more units when the price is low.

Second disadvantage is that you need to fork out a large amount of money to purchase the property especially during the down payment. But, if you purchase unit trust, you can start off with as low as RM 1000.00 and RM 100.00 as subsequent top up.

Third, you need to do a lot of research on the property before you buy. Of course, location is the most important aspect, but you also have to consider the infrastructure and facilities such as schools, roads, mass transportation etc. Whereas when you buy unit trust, all you need to do is read the prospectus, research report at Lipper.com or Morningstar.com on the rating of the fund and past performance of the fund. Also, unit trust agent can give you consultation you on this based on your financial needs.

Fourth, when you invest in strata properties such as condominium or apartment, you need to set aside a certain amount every month to pay for sinking fund, maintenance fee, quit rent etc. And, as such, condominium does not appreciate as much as landed properties. But, if you were to purchase a landed property, it will cost more than RM 300,000 in Klang Valley area. Assuming that you are applying for loan at 8% for 30 years repayment, you required to fork out at least RM 1,000 a month. So, a lot of money involved in the process.

Fifth, the process of buying property is very tedious. You have to post your ads, get a real estate agent, find a legal adviser, etc. Compare to purchasing unit trust, you only need to prepare a payment cheque, your unit trust agent will do the rest for you. When you need to sell, you just need to fill in redemption form.