saving advice or property purchase

samharry

hi..im new to this forum but would appreciate advice...i have recently come out of an iva that has been running 7years into which i have been paying £500 per month..this debt was accrued thru negative equity in early 90,s....anyway i am now debt free....i live in a house which comes with my job..i can stay in the house for about another 13yrs......can anyone tell me what is the best way to invest the £500-£600 per month that i now have spare..do i purchase a property and rent it out or do i invest in savings accounts etc..my worry with that is when i retire i have no where to live..i do get a good pension and a nice lump sum when i retire but need advice as to what to do now.

dunstonh

Who knows. This year, equity investments have outperformed property. It will change over time. There will be a stockmarket crash in one period usually followed by a period of growth. There will be a property price crash in one period usually followed by a period of growth. At the moment, stockmarket is growing following a crash. Property is high and is overdue a reduction. Perhaps when mortgage rates next go up a couple of percent or the council tax doubles where its current level is (which isnt that many years away based on the last 5 years), it will kick in then.

£500-600 can be invested tax free. With a property you will have a range of taxes to consider. There will be income tax on rental income and capital gains tax on sale.

People seem to think that property is lower risk than investing in the stockmarket. However, that is not the case. The problem is that people have short memories and only see the recent stockmarket crash and property price rise. 10 years from now it will probably be the reverse. Just as it was 10 years ago.