Shares always go up

macaque_2

Having some property within an investment portfolio makes sense and serves the interests of balance. Tying up your entire wealth in property however (as is the fashion in Britain today), is foolish and potentially suicidal for your finances. Many property speculators have been ruined in the past few years, even though house price falls and cuts in housing benefits (the oxygen of BTL) have hardly started.

If you are buying a house to live in, profit should be of secondary concern. If investment is you objective however, you should take a look at the graph below. Perhaps if people spent more time reading the FT and less time listening to Kirsty Alsopp their prospects for a comfortable retirement might be greatly enhanced.



http://monevator.com/2010/11/06/weekend-reading-house-price-boom-is-more-a-whimper-in-the-long-run/

PasturesNew

My dad's Northern Rock shares don't seem to be doing that well at the moment.

They're about the only ones he had.

tomterm8

PasturesNew wrote: »

My dad's Northern Rock shares don't seem to be doing that well at the moment.

They're about the only ones he had.

I think the OP assumes a diversified portfolio of non-rubbish shares.

Cleaver

macaque wrote: »

http://monevator.com/2010/11/06/weekend-reading-house-price-boom-is-more-a-whimper-in-the-long-run/

The FTSE All Share was launched in 1962 at a base level of 100 and is currently at 3032. So if you invested a £1 in 1962 it'd be worth £30 today, assuming you're not investing dividends.

This graph appears to show a 'current' value of £1 million of the FTSE All Share. To have that much in value now would have required an investment of £33,333 in the FTSE All Share in 1962, which this graph doesn't seem to show.

The average house price in 1962 was around £3,000 and it's now around £165,000 (I think). So an increase of about 55 times.

So if my calculations are correct: if you'd invested £33,000 in property in 1962 you'd have about £1.8 million worth of property today. If you'd invested £33,000 in the FTSE All Share in 1962 you'd have about £1 million today.

Sorry if my calculations are wrong (I'm not great at this type of thing) so please feel free to tell me if I'm way off course. But the graph looks misleading to me.

PasturesNew

I am always confused when shares are compared to houses, because you borrow money to buy a house .... and it takes a lifetime to pay it back (nearly). So the two things aren't the same are they.

To start with buying a house at £3,000, for example, would have to be compared with investing £300 and then £35/month since then .... and living in a tent/cardboard box.

Cleaver

PasturesNew wrote: »

I am always confused when shares are compared to houses, because you borrow money to buy a house .... and it takes a lifetime to pay it back (nearly). So the two things aren't the same are they.

To start with buying a house at £3,000, for example, would have to be compared with investing £300 and then £35/month since then .... and living in a tent/cardboard box.

And the majority of sensible people don't need to compare them either, as they tend to own both. And if you don't own a house, but are bullish about property you can always invest in it via a property fund anyway.

Cleaver

Cleaver wrote: »

Sorry if my calculations are wrong (I'm not great at this type of thing) so please feel free to tell me if I'm way off course. But the graph looks misleading to me.

C'mon Monkey Man, it was your thread and graph. Can you enlighten me? Surely with dividends reinvested it wouldn't be that high would it? And if the graph does show the dividends reinvested then a sensible comparator would be to show the addition of rental income from the cash purchase of the houses.

Sorry, but I'm a bit stumped. I'm sure there's a reason though, there always is.

macaque_2

Cleaver wrote: »

C'mon Monkey Man, it was your thread and graph. Can you enlighten me? Surely with dividends reinvested it wouldn't be that high would it? And if the graph does show the dividends reinvested then a sensible comparator would be to show the addition of rental income from the cash purchase of the houses.

Sorry, but I'm a bit stumped. I'm sure there's a reason though, there always is.

Cleaver

Dirk_Rambo wrote: »

its defenitely 1 i dont want not to miss

That means that you want to miss it.

Dirk, you are easily my favourite character on here after Asheron.

Cleaver

macaque wrote: »

Ahhh, a picture of a monkey. I always like it when you post a picture of a monkey, as it generally means that you don't have an answer.

kabayiri

Shares are definitely more liquid. You can turn them into cash in just a few hours.

Now if you're desperate to sell property? That is a rather different proposition.