Why bother with Savings Accounts?

chucknorris

Moist_von_Lipwig wrote: »

How does property guarantee monthly cashflow? Your tenant may decide not to pay the rent, then refuses to leave your property - what then? An example

What if you invest in commercial property and the next downturn strikes and you can't get tenants?

Of course that could happen but if you want higher returns then it comes hand in hand with higher risks. We have held investment property for over 20 years, 8 properties currently but about 5 on average, so if you are only considering only one property that’s equivalent to 100 years. In that time we have only had one incident of a tenant not paying, we took her to court and she had to pay everything plus 8% interest which was paid a couple of weeks after the case was heard.

I don't have any experience of commercial property but we are considering it for the future as due to the FRI (full repairing insuring) terms and much longer leases it means it is far less 'hands on', which will suit us with our plan to move to Spain/Algarve for the winter months.

As you say there are risks to be considered but the additional risk comes with the potential for higher rewards. Freehold ground investments are another investment we are considering for the future. I am concerned about the potential for voids in commercial property though and it is something I will be considering more in the future.

However I consider property a fairly low risk investment over a 30 year period (which is how long I would have been in the market for by the time I sell up), it is far more risky in the short term though.

Thrugelmir

chucknorris wrote: »

However I consider property a fairly low risk investment over a 30 year period (which is how long I would have been in the market for by the time I sell up), it is far more risky in the short term though.

Since the early 70's until the crash of 2008 banks have been creating more and more money (fractional reserve banking). Now we face a decade (or possibly longer ) a period of contraction . There's a very different game in play now the tide has turned.

chucknorris

Thrugelmir wrote: »

Since the early 70's until the crash of 2008 banks have been creating more and more money (fractional reserve banking). Now we face a decade (or possibly longer ) a period of contraction . There's a very different game in play now the tide has turned.

I said 30's years, for property I don't consider a decade long term, in fact it's barely the medium term. Well your answer is easy for you if you consider the risk too great, simply don't buy. Not everyone has the same attitude to risk and you have to do what you are comfortable with rather than what others tell you. I have taken most of my risks now and its already paid off, so I am in different position to someone who wants to become financially independent, so I will not be taking on too much risk either, but for an entirely different reason than you.

Lets save us 30 odd posts here, I can see that no matter what I say you will stick to your 'bear position' that the market has fundamentally changed in the long run. My opinion however is that this is merely another downturn in the economic cycle and we will eventually see a return to better times (and another recession of course). Your opinion is no less valid than mine, but don't lose sight of the fact that mine is no less valid than yours.

Thrugelmir

chucknorris wrote: »

I said 30's years, for property I don't consider a decade long term, in fact it's barely the medium term.

Many peoples success is based on timing. Jumping on the sufboard onto the right wave. Likewise failure is not recognising when the wave is petering out. Then jumping off the board while times are still good. .

chucknorris

Thrugelmir wrote: »

Many peoples success is based on timing. Jumping on the sufboard onto the right wave. Likewise failure is not recognising when the wave is petering out. Then jumping off the board while times are still good. .

LOL, talk about stating the obvious, of course timing is important, I waited for the late 80's/early 90's recession to get into full swing before investing because buying during the recession was the best possible time to invest. I am waiting for the right time to sell too, I would guess about 10-12 years time but it really doesn't matter I can wait and see how things unfold.

LIB3RTY

chucknorris wrote: »

My current portfolio is:

66.0% investment property (bought in the early 90's and all on low margin tracker mortages)
22.7% savings bonds
5.9% shares
5.4% pension

I am aware that the mix isn't ideal but property is not liquid and I am going to hold until the market is priced to sell (i would guess about 2020-2015 ish)

I'd say you are pretty well diversified. You got that property at a really good time and I imagine you make some good rent no? Is it just the mortgages that worry you about them?

chucknorris

LIB3RTY wrote: »

I'd say you are pretty well diversified. You got that property at a really good time and I imagine you make some good rent no? Is it just the mortgages that worry you about them?

I just updated my portfolio this morning actually now its:

63.8% property
24% cash
6.2% shares
6.0% pension

I'm not actually worried about the property, especially as I am on low margin tracker mortgages (1.1% over base). However I am looking forward to getting rid of them after 20 years of being a landlord, but of course I will wait until the right time, probably about 10-15 years.

LIB3RTY

thelawnet wrote: »

So why not teach us.

Post us your trades/recommendations here, and we can check back in a month/year/whatever your time frame is, and we'll see for ourselves.

Still deciding on what I want. I have decided to buy 500 shares of Hecla Mining though. If it dips to around $3 I will buy another 1,500 shares. Just look at the inverted head and shoulders on that thing. My time frame on this stock is 2 - 3 years. I'm projecting it to go to at least $10 by then. Most likely higher though given how bullish that formation is.

Look at it

LIB3RTY

chucknorris wrote: »

I just updated my portfolio this morning actually now its:

63.8% property
24% cash
6.2% shares
6.0% pension

I'm not actually worried about the property, especially as I am on low margin tracker mortgages (1.1% over base). However I am looking forward to getting rid of them after 20 years of being a landlord, but of course I will wait until the right time, probably about 10-15 years.

Going cash is a good idea IMO. I am mostly cash now after I cashed my Options in.

Have you considered remortgaging the houses on a low fixed rate? I know the B of E have a bit of a fetish for low rates but if things get desperate they may up the interest rate.

MonkeyMad

LIB3RTY wrote: »

Still deciding on what I want. I have decided to buy 500 shares of Hecla Mining though. If it dips to around $3 I will buy another 1,500 shares. Just look at the inverted head and shoulders on that thing. My time frame on this stock is 2 - 3 years. I'm projecting it to go to at least $10 by then. Most likely higher though given how bullish that formation is.

Look at it

With no other information to go on I wouldn't buy into that interpretation of the graph.