MONEYWEEK Magazine Wealth Creation report - "The End of Britain" !!!

Conrad

Generali, what would you invest £90k in right now if your aim was income? Why not a studio flat in the London hinterland producing rent of £650 pm after the leasehold service charge? No letting agents fees. The odd re - decoration once every few years.

That's £390k income (say £360k allowing for the odd redecoration / repair) in today's money over 50 years, plus an asset that will likely increase in value.

Generali

IveSeenTheLight wrote: »

Sorry, I'm confused Generali.

First two paragraphs seem to portray the benefits of investing in rental property.

Third paragraph seems to infer BTL is not a good deal

You summarize my post perfectly. There are lots of asset classes that satisfy the first criterion and the second, not just the first.

Generali

Conrad wrote: »

Generali, what would you invest £90k in right now if your aim was income? Why not a studio flat in the London hinterland producing rent of £650 pm after the leasehold service charge? No letting agents fees. The odd re - decoration once every few years.

That's £390k income (say £360k allowing for the odd redecoration / repair) in today's money over 50 years, plus an asset that will likely increase in value.

Ignoring the area to invest in, if I had £90,000 to invest I'd be mad to put it all into a single asset.

If I had £270,000 then putting £90,000 into shares, £90,000 into bonds and £90,000 into a BTL could be a splendid idea.

Kennyboy66

Conrad wrote: »

Generali, what would you invest £90k in right now if your aim was income? Why not a studio flat in the London hinterland producing rent of £650 pm after the leasehold service charge? No letting agents fees. The odd re - decoration once every few years.

That's £390k income (say £360k allowing for the odd redecoration / repair) in today's money over 50 years, plus an asset that will likely increase in value.

The idea that a studio flat will still be habitable / standing in 50 years does make me chuckle.

Conrad

Kennyboy66 wrote: »

The idea that a studio flat will still be habitable / standing in 50 years does make me chuckle.

Well there's plenty of flats from the 1920's still about.

Generali

Conrad wrote: »

Well there's plenty of flats from the 1920's still about.

....and at a guess many more that aren't.

chucknorris

Generali wrote: »

Surely nobody would be dumb enough to put a large chunk of their cash into an asset class that doesn't pay an income?

One day I might learn to stop being surprised by just how dumb some people can be.

MacMickster

The thing that puzzles me about this article is that, if Moneyweek are so convinced that money as we know it is about to become effectively worthless, why do they charge readers for a subscription to their magazine?

IveSeenTheLight

Generali wrote: »

Ignoring the area to invest in, if I had £90,000 to invest I'd be mad to put it all into a single asset.

If I had £270,000 then putting £90,000 into shares, £90,000 into bonds and £90,000 into a BTL could be a splendid idea.

So if you had £90,00 you could put 30,000 into shares, £30,000 into bonds and £30,000 into a BTL...............

£30,000 in a BTL is practically a 20% deposit on the average house

Generali

IveSeenTheLight wrote: »

So if you had £90,00 you could put 30,000 into shares, £30,000 into bonds and £30,000 into a BTL...............

£30,000 in a BTL is practically a 20% deposit on the average house

I'd be uncomfortable with that split. The reason is that you are looking at investment not exposure.

If I buy £30,000 of shares, it's likely that there is £30,000 of debt in the company so I am really taking on £60,000 worth of productive assets and a liability, which can only eat into my equity, of £30,000. There are a lot of assumptions in that but bear with me.

If I buy £30,000 of bonds I have exposure to £30,000 of assets.

If I buy a £180,000 house with my 3rd £30,000 then I have a potential loss, all of which I am exposed to, of vastly more than my initial investment. It also massively skews my investment allocation because I have £60,000 of assets in shares, £30,000 of assets in bonds and £180,000 of assets in housing.

That's a big problem with BTL IMO. You end up overexposed to a single asset class if you're using it as a pure investment play. If it's a business then it gets a different treatment but most people don't look at it like that.

I'm not against BTL as such but it isn't the risk-free investment many people portray it as. However, to return to my earlier point, it's a lot safer than burying a bar of gold in the back yard!