Should I invest in property only as part of my

building

and my partner's pension? i hear so many bad things about the stockmarket that this has put me off. I have some info on stakeholder pensions which seems to be the cheapest way to invest in pensions. any tips or ideas really appreciated.

dunstonh

Should I invest in property only as part of my and my partner's pension? i hear so many bad things about the stockmarket

Ignore what you have heard. Its complete rubbish.

A few years back we had a major stockmarket crash. The happen every now and then. Previous big one was in 1987. Basically (and in very simple terms), the markets over heated and were a long way above the long term average and companies were being valued above their true worth (such as the dot com/tech companies). Reality struck and the markets revalued down. Now, we are generally below long term averages and certain areas of the world have the potential of real growth and not backed up by hot air.

Property can work exactly the same. In the 1990s there was a significant price drop. If you look at the timescales of these things we are actually due for another drop in the next few years. But just like a volcano, it may due to go but never happen. it could be a small whimper or it could be a great big one.

If you had invested in a low/medium risk UK stockmarket fund 5 years ago, you would have turned £100 into £160. Most of that in the last 3 years. The "stockmarket" has been outperforming property for over 2 years now.

Also, when you invest, you wouldnt just stick it all in one fund (if you have any sense that is ). You would have it spread over a range of areas including low risk upto high risk. You would put percentages into each area which average out to your risk tolerance profile. Some of that could include commercial property.

I have some info on stakeholder pensions which seems to be the cheapest way to invest in pensions

Not necessarily the case. Stakeholder pensions have a defined charging structure with a cap. There are a number of personal pensions with alternative charging structures that can be considerably cheaper than stakeholders.

Cheapest is not always best. If you have a poor fund range which costs 1%, you could do a lot less than going with a personal pension with 1.5% charges but have the potential to achieve much greater growth. Over the years, most of the personal pensions on my books have outperformed the stakeholders. Give me a crystal ball and I will tell you what the next 10 years are like

EdInvestor

building wrote:

and my partner's pension? i hear so many bad things about the stockmarket that this has put me off. I have some info on stakeholder pensions which seems to be the cheapest way to invest in pensions. any tips or ideas really appreciated.

What you're asking about is risk. The answer is that there is no risk free asset class. Even cash has the risk that it produces low returns and that these are outstripped by inflation over the long term.

Hence,"Don't put all your eggs in one basket".

Rather, spread your money between the main three asset classes because the likelihood is that when one is down ,the other will be up, it's rare that they are all down at the same time.

Most people are buying a home so they have money in the (residential)property market, that's asset class 1 covered..

Usually they are invested in shares via pensions, that's asset class 2.

Often they have cash in their ISA, that's asset class 3. ISAs can also have shares in them as well.

There's a fourth asset class - commercial property - which is IMHO worth considering. It's not the same as residential, and is also on a different "cycle" from shares.It's lower risk than shares.

As of next year you'll be able to buy commercial property funds tax free in ISAs so if you could consider using the other half of your ISA fund that's not in cash to invest some money in this asset class.

What's this pensions and ISA business about? These are just "tax wrappers", so you can do your investing in your different asset classes and get tax relief on it.

IMHO it is better to use ISAs to save and invest at the moment,because if you don't use this tax perk every year, you lose it, which won't be the case with pensions as of next year.

Of course if you can join a company pension with free money from your employer, you should do that and use the ISA as the secondary wrapper.

al_yrpal

Building,

The answer is not just at the moment. The lowest point in the UK residential property market cycle was December 1996. Thats when I bought a second home, which I am just selling now it is clear that we are on the plateau, if not the start of a slippery slope. With forests of Estate Agents boards about, legions of property programs on TV, and every man and his dog planning to get a 2nd home on the continent, now is probably not a good time. The average Joe is not talking about investing in emerging economies, minerals and oil, or resurgent economies, but these are the things that are motoring right now.
As that famous investor once said "when your shoe shine boy starts giving you tips, its time to get out"

deemy2004

Just because stocks and property have gone up in realterms over the last 25 years does not mean they will do so again in the future.

Remember for the last 20 years or so we have had asset price inflation and commodity price deflation, well that seems to have chnaged now.

Real terms growth is going to be much tougher over the next 25 years than it was over the last

The best place for investment looks like being over seas i.e. canada, austrailia, india, and perhaps even japan.. Property IN a pension wrapper - Probably the worst type of investment you could make.