ONS- June: +2.3%

ukcarper

You lot just don’t get it do you Hamish figures are right and you only need to use the interest only mortgage because any capital you pay off adds to the profit.

If you had argued than Hamish didn’t take into account legal fees or that the interest rate he quoted might not be obtainable you would have had a point but that is not what you did.

Graham_Devon

ukcarper wrote: »

You lot just don’t get it do you Hamish figures are right and you only need to use the interest only mortgage because any capital you pay off adds to the profit.

You need to re-read what's already been stated.

An interest only mortgage still gives you X amount that the person investing in gold hasn't got. If you give the person investing in gold the same amount of leverage, gold ends up giving you multiples of the profit the house would have.

If you give both 100k capital to invest, the person investing in the house (using Hamish's figures) will profit by 6k after paying the 100k back.

The person investing in gold will profit by 147k after paying the 100k back.

ukcarper

Graham_Devon wrote: »

You need to re-read what's already been stated.

An interest only mortgage still gives you X amount that the person investing in gold hasn't got. If you give the person investing in gold the same amount of leverage, gold ends up way on top.

I have seen that you have now picked up those points but you do not need an interest free loan as devprop stated just one of 3%.

Graham_Devon

ukcarper wrote: »

I have seen that you have now picked up those points but you do not need an interest free loan as devprop stated just on of 3%.

I've added to my post. It all makes no difference. The only way you can put the person investing in houses on top is if you ignore the loan which put them in that position in the first place. It's quite a large factor to ignore...especially when you have to ignore the costs of investment also.

Put simply, theres no way of suggesting that the person investing in the house comes out on top in terms of profit. The only way you can do this is to ignore several huge factors, factors which make the investment possible in the first place, and then accuse people of muddling if they want to look at those factors.

It's like suggesting the person with a 10k loan to buy a car comes away with a better car than the person with 500 quid cash....then stating the person with the loan is far better at buying cars as they have the more expensive one.

Personally I don't care either way, I can't live in gold. I'm only involved because my name is tagged to a post accusing other of muddling. It's always the same. Make a completely valid, on topic point which ruins what the poster is saying, and you are a muddler.

ukcarper

Graham_Devon wrote: »

I've added to my post. It all makes no difference. The only way you can put the person investing in houses on top is if you ignore the loan which put them in that position in the first place. It's quite a large factor to ignore...especially when you have to ignore the costs of investment also.

Put simply, theres no way of suggesting that the person investing in the house comes out on top in terms of profit. The only way you can do this is to ignore several huge factors, factors which make the investment possible in the first place, and then accuse people of muddling if they want to look at those factors.

If you notice my comment about it being easy was after devprov post it’s obviously not so easy with generali. Leveraging obviously increases profits as it could loses but Hamish was talking about the last 5 years and taking a mortgage for a BTL is normal where doing the same for gold is not. I personally wouldn’t do either but people who think precious metals could not crash are deluding themselves.

Graham_Devon

ukcarper wrote: »

If you notice my comment about it being easy was after devprov post it’s obviously not so easy with generali. Leveraging obviously increases profits as it could loses but Hamish was talking about the last 5 years and taking a mortgage for a BTL is normal where doing the same for gold is not. I personally wouldn’t do either but people who think precious metals could not crash are deluding themselves.

I'm not sure why you said "you guys just don't get it do you" then if it was in reply to one poster on the previous page which you have already replied to. No ones said precious metals won't crash. If Hamish had agreed to the leverage, hadn't gone down the muddling road again, then that would have been left too.

Seems were at one of those junctures where it's pointless carrying on and it's arguing to back up posters rather than the discussion, so I'll leave it at that.

chewmylegoff

Yet another thread where someone seems to think that leverage is a magical attribute unique to property transactions.

ukcarper

Graham_Devon wrote: »

I'm not sure why you said "you guys just don't get it do you" then if it was in reply to one poster on the previous page which you have already replied to. No ones said precious metals won't crash. If Hamish had agreed to the leverage, hadn't gone down the muddling road again, then that would have been left too.

Seems were at one of those junctures where it's pointless carrying on and it's arguing to back up posters rather than the discussion, so I'll leave it at that.

Posts 37 and 39

DervProf

HAMISH_MCTAVISH wrote: »

In the last 5 years from today, Gold is up 147%.

So, lets run an example.....

A buyer in Aberdeen in 2007 takes a 10K deposit and buys a 200K house.

Today, that house would be worth £212K. So a profit of £12,000.

Had he instead taken the 10K and bought Gold, that Gold would be worth £24,700. So a profit of £14,700.

So far so good, right?

Just to be clear (it's late on a Saturday evening, and I`ve had a busy week), was I wrong to question the profit on the Aberdeen house ?

"So far, so good" made me look at what had been typed, and there seemed to be a big error. If I spend X to make something worth Y, then profit = Y - X. Now I'm not a suit wearing type with an accountancy degree, but I do understand the basics of business, and I know how to work out if I`ve made a profit (on paper, or real). I take the value of my investment and subtract what it has cost me. However, maybe I need to adopt the workings of our banking industry over the past decade or so, where you can just make it up as you go along.

HAMISH_MCTAVISH

Here's the relevant part for you DP, as you still seem to be confused....

Except of course, people need a place to live, and you can't live in £10K worth of Gold bullion....... so had he not bought the house, he'd have needed to pay rent.

A 6% rental yield (typical for Aberdeen) on £200,000 for 5 years = £60,000.....

And in that same time he'd have been able to average around 3.0% or so in mortgage interest.

So the gain from buying versus renting is now £42,000.... Which beats the alternative, ie, a £14,700 profit from investing the depsoit in Gold in 2007, hands down.