Is BTL now the best retirement investment?

Procrastinator333

Don't really have the time now, so most of this will have to wait until this eve.....

HAMISH_MCTAVISH wrote: »

Not according to this article.....

http://www.pensionfundsonline.co.uk/articles/growthnews.aspx

Average real return for last decade is just 1.7%.

Average real return for last 50 years is just 4.3%.

Anyway.... Back to BTL.

Pensions are not a 10 year investment. The 4.3% after inflation is a better guide. But keep in mind, that is the growth of the pension pot itself. Not the return on the net pay sacrificed.

In terms of growth from the net pay you sacrifice, over a 25 year period it will be quite a bit higer.

HAMISH_MCTAVISH wrote: »

I disagree. I think there's virtually no chance a pension will outperform a BTL in the next 25 years.

To me, a house will always have intrinsic value, pension funds can and have been wiped out.

And the very worst case scenario with BTL is that someone buys you a free house, that turns out to not be worth as much as you'd hoped, or that it took longer than you hoped for them to buy it for you.

You can put almost anything you want in a pension. Shares, bonds, trackers (share index, currency, commodities), art, fine wine, cash, commercial property, almost anything.

Pension funds of old were very different. Equitable was a very different product. Short of the stockmarkets falling to zero, they can't be wiped out.

The worst case for BTL isn't that you get a house, the worst case is your tenant doesn't pay for 6 months, leaves you a £5k bill, you don't have the funds to sort it out and you get repod.

Anyway, gotta go now, will post some more this eve.

dunstonh

I disagree. I think there's virtually no chance a pension will outperform a BTL in the next 25 years.

There are about 50,000 different investments you can hold in a pension. A pension itself doesnt perform. What you invest in does. This can include property funds. So, what you are saying is that a pension invested in property will not outperform property.

To me, a house will always have intrinsic value, pension funds can and have been wiped out.

Please provide an example of a personal pension which has been wiped out (you wont be able to as no such thing exists).

abaxas

dunstonh wrote: »

Please provide an example of a personal pension which has been wiped out (you wont be able to as no such thing exists).

The issue (as with all investments) is that who knows what will happen in the future.

lisyloo

I can't remember where the phrase come from but I think it's very true

Whether you think you can or whether you think you can't you're probably right.

I suspect a reasonable savvy person can make a success of either BTL or a pension/investments.
Which one is best, we can only tell with hindsight.
Personally I don't want to run a business right now with all that it entails which makes that decision easy.

I don't think there is any need to argue about which is best as they both work if you manage them well.

dunstonh

The issue (as with all investments) is that who knows what will happen in the future.

That is true. However, a quality managed portfolio would typically have no more than 1% of its holdings with any one company or asset. So, to be wiped out would take a significant event which would make property worthless as well. Even the lazy investor option tends to have no more than 5% with any one asset.

Hamish seems to be running out the typical non-researched and inaccurate anti-pension excuses to justify not doing it. For example, his mention of people losing their dream pension when using Eq life. Well that is rubbish as Eq life unit linked funds were not affected. Nor was the with profits fund without guarantees. It was just those with guarantees and they didnt lose the pension. They lost the guarantees and the returns after that were pretty poor (which is why many moved it away from them to get better).

The fact Hamish doesnt seem to know the difference between investments and tax wrappers is a major failing when you intend to spout off against them in a thread.

Take the following comment by him:

And look, I don't mean to be unduly negative about pensions..... They do have a place, and do serve a purpose. I just don't trust them, and I know for a fact they're anything but the "safe" investment they're peddled as by snake-oil salesmen sorry, Independent Financial Advisors.

That just shows the lack of knowledge. A tax wrapper is not safe. its not risky. Its a tax wrapper. The risk is in the assets you place inside the tax wrapper. If you dont trust the pension tax wrapper then you cannot trust any other tax wrapper. So, that rules out ISAs. You would have to rule out unwrapped options as well which leaves you with nothing left.