Buy to Let investment advice

CannySaver_2

besti wrote: »

If the Invesco fund goes down in value does the fund manager still get his bonus? Yes. I was an IFA for 10 years and all we saw was new products being pushed by the banks that are designed to make the banks richer. Nothing wrong with that except that they try and spin it to say how great it is for the client. My clients who made the most over the years always had BTL portfolios with terraced houses renting to families. No rental agents involved either.

Yes, the fund manager from Invesco does get paid, and they still take their charges, however no fund can offer 100% positive returns, unless your name is Madoff of course! You could argue that if the market falls by say 10% overa given period of time but the fund only falls by 2% then the manager is worth the AMC of 1.5% or whatever it is they charge.

I'd agree, tied agents from banks do foten peddle poor value products to people who they are unsuitable for, however that is no reasons to throw the baby out with the bath water, and avoid funds or similar investments completely.

Just because there are no letting agents involved doesn't mean there isn't cost in terms of both £ and also time, someone has to sort the tenancy agreements, deal with issues on the house, sort arrears etc.

The property market has tanked over recent years, and I can see no reason why house prices will rise in the short or even medium term. The argument that demand is outstripping supply even falls down if the banks are not lending.

I am not against buy to let per se, I have my own properties which I rent out, but they are only part of my portfolio of investments. it's all about one word....diversification.

The Canny Saver

brianrhill

andybenw wrote: »

Shares in listed property companies are significantly more volatile than direct property investments or unit trusts, and perform more like equities than property. However, in the long-term, their performance is more closely correlated with property than equities.

Recent performance has been much poorer than for direct property, and shares in REITs have also continued to trade at a discount to Net Asset Value, despite the removal of the tax inefficiencies that were a major explanation for the discount.

Quote above from the website you directed me to brian. Not sure if I like the idea with the prospect of possible house price falls if things go wrong.

Looks more illiquid to me in a way as you would have to sit on your hands at times or take huge losses???

Hence the reason that it's important when putting together a portfolio to make sure it is diversified, uncorrelated where possible, and all in line with attitude to risk. BTL goes against all of those principles, hence the reason we have seen a number of 'mega' BTL landlords lose their shirts 'n all!

gadgetmind

andybenw wrote: »

Or would I be better investing in dividend yielding shares. I know BTL would be a bit illiquid but at least it can't go bust.

Dividends can be very tax efficient, and some solid blue chips with good dividends and cover are available at very low p/e ratings right not. However, you'll need a least 15 holdings, across a variety of sectors, and ideally you'd have some fixed interest alongside (so same SIPP or same ISA) to let you rebalance.

Alternatively, you could hold trackers instead of individual shares, and spread across sectors and territories. Maybe also add property and commodities too. Get some books on constructing portfolios and have fun.

Of course, equities have bad patches, and you will need to be able to leave them untouched (and add to them!) during bad patches, hence the fixed interest and also a cash buffer. I'm planning on hitting retirement with three years of income held "cash like" outside of my pension.

You could also consider a basket of high yield investment trusts. These "steady eddy" investments will keep delivering the dividends and hold reserves of their own, which means you don't have to, but I still would!

I have a small portfolio of blue chip shares, and some IT holdings (but not for income) but am moving towards more passive portfolios of trackers and gilts.

You can expect a real return of 4% to 5% pa from an portfolio of equities and gilts but it's always a trade-off between return and volatility.

I keep looking at BTL but it all seems like too much hard work and too illiquid.

brianrhill

Amateur advice ^^^^^^^^^ (no disrespect intended Gadgetmind) is fine for the that individual's own money.

My advice to peolpe thinking of following gadgetmind's suggestions is whatever you do, don't copy it. Why? Because you can guarantee that gadget's situation will be entirely different to your own and as such you should take it with a pinch of salt.

Gadgetmind - don't take this the wrong way, but I really think you should put a disclaimer in your signature for posts like ^^^^^^ as someone might try and mirror what you're doing with your own portfolio. I understand from your posts that you have some experience of investing, but beyond 'having fun' with your own money and reading some books and stuff in the internet, you haven't mentioned any formal training or investment qualifications. Working on what regularly comes across my desk, someone else's little knowledge is a dangerous thing.

gadgetmind

brianrhill wrote: »

My advice to peolpe thinking of following gadgetmind's suggestions is whatever you do, don't copy it.

I presented a menu rather than dictating a set meal, and also advised that the OP read books on portfolio construction. Perhaps I should have made it clearer, but I've reread my message and I don't think it comes across as even slightly prescriptive.

Gadgetmind - don't take this the wrong way, but I really think you should put a disclaimer in your signature for posts like ^^^^^^ as someone might try and mirror what you're doing with your own portfolio.

I don't recall seeing anyone using disclaimers on any online investment forums. As for mirroring my portfolio, you're right, it's very personal to me (and my wife) and is also very much work-in-progress, but I didn't give anything anywhere close to enough detail to let anyone copy it in any way.

As for a signature, that's a good idea, and I think a recommendation to read "Smarter Investing" by Tim Hale, "The Intelligent Asset Allocator" by William Bernstein, "The Intelligent Investor" by Benjamin Graham, and "A Random Walk Down Wall Street" by Burton Malkiel would be most appropriate.

BTW, Tim Hale has a handy checklist regards when to use an IFA and when to DIY. For me, the answer was clear (and my last high-fee investments are being moved this week) but for others I fully accept that it might not be. However, understanding portfolios and the investment options that an IFA is unlikely (not allowed to?) mention is very worthwhile.

you haven't mentioned any formal training or investment qualifications.

My degree-level background in mathematical modeling, statistics, probability theory, numerical analysis, etc., means that I am now confident to handle my own investments (wish I'd done it decades ago, but there you go.) However I wouldn't attempt to advise anyone else as my knowledge of taxation and pensions legislation doesn't extend very far from that which pertains to my own affairs.

atush

I dont think, as he is not a professional, he needs a disclaimer such as you have for obvious reasons.

He suggested reading, and said WHAT HE DOES not what they should do. And he gave other options too as well are recommended reading. If every ammature had a disclaimer, it would be simply ridiculous. If some numpty chooses to mirror his investments, then what happens is up to them as he has never professed to be a professional.

gadgetmind

atush wrote: »

he has never professed to be a professional.

I have always preferred the definition(s) of amateur and professional that differentiates based purely on whether you get paid for it or not.

I've known a few women who were stunning in bed but they never asked me for a penny!

brianrhill

gadgetmind wrote: »

I have always preferred the definition(s) of amateur and professional that differentiate based purely on whether you get paid for it or not.

I've known a few women who were stunning in bed but they never asked me for a penny!

I'll let you off then, especially liking that ^^^ post and the new sig :rotfl:

gadgetmind

brianrhill wrote: »

I'll let you off then, especially liking that ^^^ post and the new sig :rotfl:

I've been thinking of a sig for a wee while, so thanks for the inspiration.