property investment bonds

rigsby

I am considering putting 50K into an investment bond with a company that deals with commercial properties. I have just read a report that the property bubble is likely to burst so I am uncertain. My wife and I are retired (early) own a property in the uk valued at about 450,000 and a property abroad worth about 100,00 both with no mortgage.
Any advice?? as I invested 10,000 with c/life some years ago and have made no gain whats so ever.

rigsby

si1503

rigsby wrote:

I have just read a report that the property bubble is likely to burst so I am uncertain.

They have been saying this for almoast a decade now. Last year property investments saw strong returns, so I wouldn't buy too much into it.

dunstonh

Was the investment going into:
1 - commericial property?
2 - Residential property?
3 - Global property?
4 - Property shares?
5 - Reit funds?

Having some exposure to property is ideal in any portfolio but it isnt just one thing. All the above have different risks and volatility associated with them.

Single fund investing is old fashioned and obsolete (although it still occurs). If you are sticking all your liquid investments into a single property fund, then that is a bad move.

Cannon_Fodder

"all your eggs in one basket" springs to mind.

whatever property might or might not do, same as the c/life fund, if its your only holding then that's the only end-result possible...

By splitting your investment between more funds you may miss out on 100% of "the big one" upwards. But, equally you should hopefully not be too badly hit by 100% of "the big one" downwards...

Are you using your Equity ISA allowance? What particular features of the Bond attract you to it?

rigsby

The bond was recomended from a friend who has seen great returns over the past few years. The property is commercial. I am considering 30k in a 5 year type bond and 20k in an easy access but both with the same company. I understand what you mean with all my eggs in one basket. Anyone recommend where to go from here

rigsby

dunstonh

Anyone recommend where to go from here

Property funds are available within ISAs, Unit Trust/OEICS, Investment bonds and pensions. Is bond the best option for you? In other words is the investment bond wrapper most suitable for you or would the ISA and/or unit trust tax wrapper be a better option.

If you want some in property, then diversify it. European property funds probably have better potential than UK property funds. Especially when you consider that the anticipated returns for UK commericial property funds is 2% this year returning to around 8% in following years. Of course, they have been saying that for a few years now.

Even with that considered, you wouldnt normally put more than 40% at most in the portfolio. Not now anyway.

The bond was recomended from a friend who has seen great returns over the past few years.

Japan doubled your money in 2005. If you invested at the beginning of 2006 based on past performance you would have lost money in 2006. Past performance is no guide to future returns. The same applies to property funds (albeit with less volatility!)

EdInvestor

What do you want from this 50k? Capital gains? Income? Target amounts?

Are you a high rate taxpayer? Is your wife?

What other investments do you have?

rigsby

At present I would like steady growth from my investment.
I also have 10k with c/life (invested 6 years ago and is worth 10,080
halifax share issue when floated worth approx 5k
s/life share issue worth approx 5k
a cash isa
and my wife has a mini ISA which she pays £50 per month into
I also have a chunk of money in a bonus saver account making approx £150 per month after tax

My wife and I are not tax payers apart from her small pension and disabillity allowance following a spinal injury.

Cook_County

Based on what you say this is an extremely odd investment choice. You do not seem to have an emergency cash fund.

Your assets are £550k in real estate and you want to buy more??

Shouldn't you have balance? Have you considered investing in a pension plan and going for immediate vesting so as to boost your incomes at low cost?

What is the tax position in the foreign country?

EdInvestor

I would suggest it would be better to expand your share portfolio with some more blue chip shares, but diversified across more sectors so as to reduce risk.

Have a look at the High Yield portfolio idea.

You can either use the HYP for income by taking the dividends as spending money or you can reinvest them to get extra capital growth.

dunstonh

or better still, look at sector allocated portfolios which are far more diverse and give you better potential for growth over the long term. These can be altered to match most risk profiles and can be varied over time as your risk profile changes.