Best types of investment

mrstaypuft

Hi.
Just wondering what is the best type of investment for money.
I have always assumed that property was the best as it normally will allways go up in value and seems to be the safest way to make sure you will get your money back.
What are other peoples opinions if you had £125k are there things other than property that are just as safe and will make a nice profit.

Aegis

Property isn't safe. Almost nothing is.

However, to my mind, nothing really beats a diversified portfolio of investments including, but not necessarily limited to, cash, bonds, equities, property and commodities is likely to produce the best long term returns while keeping volatility down to a reasonable level.

Loughton_Monkey

mrstaypuft wrote: »

Hi.
Just wondering what is the best type of investment for money.
I have always assumed that property was the best as it normally will allways go up in value and seems to be the safest way to make sure you will get your money back.
What are other peoples opinions if you had £125k are there things other than property that are just as safe and will make a nice profit.

You will not get many sensible answers to this. Where best to invest £125K would depend upon:

1. How long you want to invest for. A year? or 30 years? Makes a lot of difference.

2. For what are you investing? An income, or capital growth? To give you money in retirement? Or to put down as a house deposit?

3. Your attitude to risk. Must the capital be 100% safe or are you prepared to risk that in return for potentially higher returns in the lnger term?

4. Your current savings position. Do you have ISA's already? Do you have Pension already?

A lot of people would recommend a mixture in any case. Not just one investment.

lisyloo

I would also go with a diversified portfolio.

Other things to consider

1) Can you take advantage of employer benefits e.g. perhaps your employer offers to put money in a pension.

2) Can you tke advantage of tax breaks e.g. ISA allowances, your own home (PPR), NSI savings, pensions etc.

3) How much "work" so you want. Managing a BTL property means work and some of that may need your urgent attention (e.g. water leak). Managing a portfolio requires some effort but generally not your urgent attention. Putting money in your own property or savings accounts does not require very much monitoring.

Property is not a safe bet at all, especially with all the austerity measures coming up. In fact there are a lot of downsides to it right now.

LongTermLurker

mrstaypuft wrote: »

Hi.
I have always assumed that property was the best as it normally will allways go up in value and seems to be the safest way to make sure you will get your money back.

That's what they all thought!

dunstonh

LongTermLurker wrote: »

That's what they all thought!

People have got short memories.

Just ask Americans what they feel about property always going up in price.

I was watching an old early 90s episode of Law & Order the other day and they were moaning about recession and the property price crash on that. I was thinking at the time that things dont change. History just repeats itself. Some people just seem to forget.

LongTermLurker

Well to be honest, they probably will keep going up given a low entry point and a long timeframe. I guess mine's up about 35% over the last 6 years.

Prices drop, people buy, prices rise, houses gain, people buy and prices drop - so long as you don't buy with the flock I guess there's still a chance of success. The problem is when people see it as a one-way investment.

Loughton_Monkey

The Nationwide House Index started from end 1973 - some 37 years ago.

This informs us that (in my area at least - Outer London) up to Q3 2010, prices have risen by 8.37% annually (compound average). Whilst a reasonably good return (tax free for the homeowner), this has obviously been a bumpy ride.

Break it down to decades - (well three decades and a 7 year period) - the compound annual growth has been 12.14%, 5.95%, 10.81%, and 3.06% respectively. Not sure, really, what this is telling us. But it could either be saying "the days of solid property price increases is over" or, if you want to take a more optimistic view, "this must mean we are near the bottom. The only way, now, is going to be up".

My own take on it is that the 12.14% needs to be heavily discounted as a true rise, since this was a period of the most rampant inflation seen in recent memory. The 5.95% (1983/93) sounds a reasonably honest figure. The 10.81% for 1993/2003 was probably indicative of a bubble - specifically in 2002/3 (33.4% rise in 2 years).

I conclude that the last 7 years of low growth is in part correction of the bubble, and now compounded by recession and specifically the drying up of the mortgage market. I suspect it will take another 3 years - the rest of this statistical 'decade' to 2013 - to finish bottoming out, before stagnating. After this, I can only believe that the combination of a huge demand backlog, coupled with greater confidence, will see prices doing very nicely.

I am certainly pencilling in my own 'equity release' for 2015 earliest, certainly not before.

jamesd

Long term UK history is that equities produce a return about 4% higher than commercial property. I forget how much higher than residential property, the First Report of the Pensions Commission contained some information on it in an appendix. That's available online.

mrstaypuft

I have a property that I rent out at the moment but I have been hearing I could make just as much if I sold it and invested it elsewhere.
Nothing risky and am happy with long term, just know that whatever happens at the moment I will allways have that house to sell if i needed too.