£1.2tn given to old from young

John_Pierpoint

Harry_Powell wrote: »

Anyone buying shares, anyone buying ivestment property will be sowing the seeds for future wealth. The people who make money are the ones who buy in a recession when assets are cheaper, not in a boom when assets are overpriced.

As an individual you are absolutely right.
As a nation of individuals companies and government organisations we have spent our wealth very foolishly.

I'm not sure that prices have fallen (in real terms) to the level that accounts for the loss of all the wealth that was squandered and is not there.

We also have the problem that the government has been creating fiat money in an attempt to keep the circus going.

There is a danger of making a nominal profit (and paying tax on it) in a devalued currency.

Difficult choice to call.

ukcarper

Deleted_User wrote: »

OK. So imagine you don't buy a house. You spend your money on rent, holiday's nights out. You don't have any assets to sell.

Or maybe you're not that silly with money. You put your money in the bank. But where are you going to live? How are you any better off than the person that has a house (and therefore the option to either live rent free or to live like you with the added bonus of a big cash sum)?

But that's not really my question. I'm trying to understand this idea that money spent on houses doesn't really exist. How is buying a house any different from buying a car? OK - big difference - a car depreciates where as a house typically doesn't....not in the long term.

The way I see it is the money you spent on the house initially and any interest you pay does exist but the amount your property increases over and above that doesn’t.
Take my house I paid 60k on it back in the 80s and paid the bank say 60k in interest but it’s now worth about 270k therefore 270k-60k-60k=150k is not in circulation
Mind you just had a thought must be less than that in real terms, as I haven’t taken into account inflation.

[Deleted User]

ukcarper wrote: »

The way I see it is the money you spent on the house initially and any interest you pay does exist but the amount your property increases over and above that doesn’t.

Well my mum and dad purchased a house for 11k back in 69. My dad died in early 2007 and my mum went into a nursing home. We sold her house for £230k. Some of my mum's cash savings paid for her nursing home care (giving her better care than those without capital have) until she died in late 2007.

I am now enjoying spending my half of the 230k (along with my half of their savings that they wouldn't have been able to save had they been paying rent all of those years).

We also lost my mum-in-law and inherrited all the money made on her house. Only about 69k (she paid about 1k and it sold for 70k) but definately real money.

Trust me - it exists!!

Those in the SE of England are making substantially more.

Another example - I sold my first home and moved in with my then boyfriend. The amount that my first property increased over and above what I paid went into the bank for a couple of years. It existed. It continued to exist when it was later used as a deposit on a much bigger house.

We now live in a huge house with a huge garden in what we think is going to be an up-and-coming area. Interestingly we haven't had to touch our inheritance to pay for it. Despite paying very little for our very tiny old house it's worth a considerable amount now - enough to pay for a house of twice the size (and quality) and with a garden about 20 or 30 times the size! We got it at a big chunk under valuation price because property is moving slowly and the sellers were in a hurry to move. Yet our pokely little old house is in an area where property is still moving pretty fast and at decent prices. There will come a time when both house and garden are far too big for us to cope with and we'll be forced to downsize. It's likely that we'll release a lot of cash from the property at that point which would make life more comfortable in later years. And if it doesn't work out like that then no big deal as right now we're living in a house we adore.

I'm not trying to misslead you - buying property *can* turn your life around completely and let you afford things you never dreamed possible. It's a lot down to luck, but historically things have been stacked in your favour. But you need to be prepared to make sacrifices and try it or you haven't a hope of getting lucky!

StevieJ

Graham_Devon wrote: »

Sorry, I give up

Graham has been outDevoned :T met his match this time

[Deleted User]

OK, just spotted your edit:

Take my house I paid 60k on it back in the 80s and paid the bank say 60k in interest but it’s now worth about 270k therefore 270k-60k-60k=150k is not in circulation
Mind you just had a thought must be less than that in real terms, as I haven’t taken into account inflation.

I get what you're saying. And this is what I was asking people to explain - so thank you!

But my question to you is that in that respect does property differ from any other investment?

Say for example you'd paid 60k for gold, silver, rare paintings or other investments. If those investments had increased in value to 270k would an extra 210k (the amount that it had increased in value) be in circulation prior to you selling it?

This is what I'm trying to establish. Is property any different from any other asset in this respect? And does it matter to owner or economy that capital gains aren't realised until you sell?

ukcarper

Deleted_User wrote: »

OK, just spotted your edit:



I get what you're saying. And this is what I was asking people to explain - so thank you!

But my question to you is that in that respect does property differ from any other investment?

Say for example you'd paid 60k for gold, silver, rare paintings or other investments. If those investments had increased in value to 270k would an extra 210k (the amount that it had increased in value) be in circulation prior to you selling it?

This is what I'm trying to establish. Is property any different from any other asset in this respect? And does it matter to owner or economy that capital gains aren't realised until you sell?

I think the only difference is that you can chose to sell other investments when you like, but if the house is your home you need somewhere to live. If it is a second home or pure investment I can’t see any difference. The main advantage I can see with property is you can live in it.

Don’t get me wrong I bought my first house in 1972 and am just about to finish paying for my present house. For the vast majority of that time my mortgage has been considerably smaller than my rent would have been and soon I will be living rent-free in a house that would cost me in excess of £1000 a month to rent. Even if HPI had only keep up with inflation I sure I would still have paid less in mortgage payments than rent. That might not be the case in the future but who really knows.

chucky

Harry_Powell wrote: »

We locked up some money in a sledge just before xmas. Best investment we ever made, had great fun on xmas day.

very nice!! i hope that you enough time to do the volunteering

Harry_Powell

chucky wrote: »

very nice!! i hope that you enough time to do the volunteering

They wouldn't have us! They were oversubscribed with volunteers and turned us away. Couldn't believe it! :rolleyes:

Still, it was nice to think that so many people were up for giving a bit of their time over the xmas period to a worthy cause. It'd be nice if some that did, continue it into the New Year (bit of a hyprocrite here, because we haven't ).

StevieJ

Harry_Powell wrote: »

You're right, I'm falling for his cunning 'muddle up a thread' ruse again. He's getting desperate though, even my 5 year old nephew knows about money circulation, by pretending he doesn't understand it, Graham is overplaying his hand. He'll be arguing next that he doesn't believe that snow is frozen water and we'll spend another 20 pages trying to explain it while Graham laughs at us all and the muddle he's created.

He's a genius thread wrecker, to be sure. :cool:

He has found a suitable adversary now, expect some 20 to 40 page threads as the norm

Harry_Powell

StevieJ wrote: »

He has found a suitable adversary now, expect some 20 to 40 page threads as the norm

lol, can you imagine! :rotfl: