Best way to invest £250k

ds1980

Don't over complicate things id sink at least £150k into property id buy 20 houses with that. all earning me an income.

The simple maths is that

Property Prices = Up
Rental INcomes = Up
Mortgage Values = Down (Capital and Repayment)

THe only way is up!

Buy to lets are only high risk if you dont know what your doing if you research enough and do your maths they are very easy to run.

You need to know where to look for properties but they are out there!!

Safety first..........come on live a little if not a little longer!

dunstonh

Amazing how defensive the industry people all are about investment bonds, isn't it? Easy to see why when you look under the bonnet though.

Check the charges on the FSA's site.

www.fsa.gov.uk/comparativetables

What great little earners they are. No wonder they sell so many.

Doesnt apply to me. I have sold them and will continue to do so. However, as an NMA IFA, the charge/commission is the same regardless of the tax wrapper.

Plus, as has been said so many times before on this forum and always ignored by Ed, the FSA tables only go to £25,000. Investment Bonds are not going to be competitive at that level. They are more competitive for larger investments.

Additionally, we don't know enough to say that an investment bond is correct. It is an option that may be correct.

AND, as investment bonds can be arranged on cheaper terms than ISAs and Unit Trusts, one has to assume that ED is saying that you shouldnt be purchasing those either.

Don't over complicate things id sink at least £150k into property id buy 20 houses with that. all earning me an income.

The simple maths is that

Property Prices = Up
Rental INcomes = Up
Mortgage Values = Down (Capital and Repayment)

THe only way is up!

Buy to lets are only high risk if you dont know what your doing if you research enough and do your maths they are very easy to run.

Thats a naive statement and suggests you have never experienced a property crash.

With rental yields very low (below savings accounts in many cases) and management companies, insurance, liaiblity and misc costs to be taken into account along with tax and hassle, property has to be the right thing for the right person.

If you do fancy property without the hassle, then it can be purchased in investment fund form and you would include it in a cautious portfolio but not for all of it.

ds1980

Don't over complicate things id sink at least £150k into property id buy 20 houses with that. all earning me an income.

The simple maths is that

Property Prices = Up
Rental INcomes = Up
Mortgage Values = Down (Capital and Repayment)

THe only way is up!

Buy to lets are only high risk if you dont know what your doing if you research enough and do your maths they are very easy to run.

You need to know where to look for properties but they are out there!!

Safety first..........come on live a little if not a little longer!

ds1980

For sums far less than £150k let alone £250K I make well in excess of 12k per year on my investments mainly property. It is my sincere belief id make £150k stretch far further than any financial advisor and his cosy commision would ever achieve.

The reason why i will always make money on property is because of advisors like you telling everyone to steer clear. There is no such thing as a property crash you only lose out if you sell, these people wanted an income which this would certainly give them irrelevant of a "crash in the market".

My properties which have all been bought in the last 3 years ( not ones with masses of equity from the property boom ) all make well in excess of 10% per annum which you can't get from savings accounts. You need to know where to look though. |Its very easy like anything in life if you are prepared to do a little hard work.

dunstonh

For sums far less than £150k let alone £250K I make well in excess of 12k per year on my investments mainly property. It is my sincere belief id make £150k stretch far further than any financial advisor and his cosy commision would ever achieve.

You are only making 8% before tax. Your belief is wrong.

Real example: £100k invested 29th June 2005. Currently worth £118,172.50 (which is 18.2% up) and has had withdrawals of £9778 in that period. With those taken into account, its an increase of 28%.

That is in a portfolio that set up with only 20% stockmarket exposure.

Whilst you jest about "cosy commission" which only came to £1000, you would have paid stamp duty, solicitors and surveyers to an amount higher than that.

Another thing to note is that property investment funds have beaten your 8-10% as well. So, property could have been bought with less liability and cost and turned round a better profit that you have achieved. Not that I would recommend anyone sticks 100% into property.

Property is an option but this always goes up notion is rubbish. None of the options available "always go up".

ds1980

Where do you get 8% from?? how do you know i pay tax?

real example: 2K yes £2k invested in 2003 now worth £750000 -£850000 in assets sense worth approximately £150k-£200k in real cash terms. Very much doubt that you could turn £2k of anyones money into that amount in such a short period of time. Soon to top £1 million with approx £250-£300k real money.

Your advice is good but your far from reality.

For info a lot of houses are stamp duty exempt, stamp duty is only paid on properties over £125K. Surveys are free with mortgages, fees can be added to the loan and solicitors are only needed if things get complicated like i say if you know where to look!

Sorry forgot to add this excludes the monthly rental incomes also!

dunstonh

Where do you get 8% from?? how do you know i pay tax?

You said 12k from 150k. That is 8%. As for tax, 12k income is well above the personal allowance and you said properties which suggests you have more than one. Rental income is taxable income and capital growth is subject to capital gains tax after allowances.

real example: 2K yes £2k invested in 2003 now worth £750000 -£850000 in assets sense worth approximately £150k-£200k in real cash terms. Very much doubt that you could turn £2k of anyones money into that amount in such a short period of time. Soon to top £1 million with approx £250-£300k real money.

Your advice is good but your far from reality.

I think your example is far from reality. 2k to 3/4 mill in 3 years is pie in the sky. Thats a gain of 37400% in 3 years. I doubt anyone here would believe that.

For info a lot of houses are stamp duty exemt, stamp duty is only paid on properties over £125K. Surveys are free with mortgages, fees can be added to the loan and solicitors are only needed if things get complicated like i say if you know where to look!

mortgage valuations are free with mortgages. Surveys are not. If you are doing a mortgage buy to let (which is classed as a high risk transaction) then it is a very different transaction to someone buying property outright with no mortgage. The fees are still payable and if added to the loan, they get more expensive.

However, this is an investment of £250k and I doubt gearing would be what the OP has in mind and that is exactly what a mortgaged buy to let is. Gearing offers increased potential for gains but also increases the loss potential as well.

Chrismaths

Real (ie adjusted for inflation) property prices fell from 1991 to 1996, not recovering their value until 1998. I'm assuming that 1980 is your birth year - you (like me) will not remember negative equity, and how awful that situation can be.

Property prices will boom if:

a) unemployment falls, or at least doesn't rise (so people can afford to pay their mortgages)
b) interest rates fall or do not rise (so people can afford to pay the interest on their mortgages)
c) the supply of new housing is restricted
d) their is an increase in demand for houses (from immigration/smaller households/higher birth rate/investment)

House prices will crash if:
a) unemployment increases (so people can't afford their mortgages, increasing repossessions and therefore supply)
b) interest rates rise
c) new housing supply increases
d) there is a decrease in demand for houses (less immigration/household size remaining the same or increasing/less investment demand due to reduced returns/affordability)

A mixture of things happening from the first list and the second list will result in something between a crash and a boom. Property is not some magic investment that gets you returns with no risk, there are risks attached to it. Saying that I've made money over the last 3 years is irrelevant, we're talking about future returns, and past returns are a rubbish predictor of future ones.

Chrismaths

2K yes £2k invested in 2003 now worth £750000 -£850000 in assets sense worth approximately £150k-£200k in real cash terms. Very much doubt that you could turn £2k of anyones money into that amount in such a short period of time.

I could have - £2000 to £150,000 is an annualised return of 320%. I've got plenty of investments that have gone up 250% in 3 years, so if I had leveraged them 50:1 like you have (at least!), they'd be worth £250,000.

dunstonh

Chrismaths wrote:

I could have - £2000 to £150,000 is an annualised return of 320%. I've got plenty of investments that have gone up 250% in 3 years, so if I had leveraged them 50:1 like you have (at least!), they'd be worth £250,000.

Yes. I see that too. These properties aren't owned out right. They are mortgaged buy to lets. The debt position is being ignored.

If you buy a house at 100k and only put down 5k and borrow 95k, then you haven't turned your 5k into 100k. Your net position is still 5k.

The gain is when the value grows. 98-03 saw some very good gains and doubling in that period was possible. So, if sold at that point, a significant gain is realised. Capital gains tax would take big hit against it but it would still be a big gain on the initial outlay.

Going forward, you have to look at the potential and are they going to double again like that? Not likely but we don't know. The potential isn't there but it was 5-8 years ago. If you are still heavily leveraged, then you could lose a lot of the gains in a very short period and it can cascade and ultimately, you could lose the lot unless you have the liquid capital to protect yourself from short/medium term drops in the market.

CM, if you have lerveraged at 50:1 and invested on the stockmarket in 2003 you would have beaten property. How many more "could haves if you had done that" can posted... Hindsight is great and I dont think I would want to borrow to invest in property in the UK at this time. Could be wrong, could be right but I dont think the potential matches the rewards. I wouldnt borrow to invest on the stockmarket either. Perhaps thats more a reflection of my risk profile...