SOD IT!!! I'm giving up and having a damn good holiday instead!!!

meanmachine_2

keeperbear wrote: »

You make alot of assumptions that just weren't the case. In order to afford to buy way back in 1996, I had to JOINTLY buy with a friend, interest rates were at 13.5% .

Utter utter nonsense I'm afraid.

I don't think someone who was paying 13.5% on their mortgage when interest rates in 1996 were at 5.68% should be giving any one advice.

I suppose, back in 1996 when things were "so tough" you were working down a pit and your 2 year old was cleaning chimneys.

Blah blah blah.

Generali

fimonkey wrote: »

Thanks all. I SHALL look into it because I enjoy a challenge, but I am slow to learn new tricks, AND in terms of something I don't know well I'd say I'm very cautious... fine if I blow the lot on a holiday cos that gives me memories and experiences that no-one can ever take away from me (barring a head injury and amnesia). and I know from experience I LOVE holidays, parties and clothes...... However loosing the lot on the stock market would gut me! Where's the fun in that?

On a more serious note... I clearly need to start at the bottom and will read the links provided (thanks again).. but how much should I gamble/invest? (both still mean the same to me at the moment, and I don't gamble unless it's a dead cert)... I'm thinking about 10K over 5 years, but is that worth it once fee's etc are paid?

In terms of odds, what are the chances of me being conservative with the shares I buy, but still beating 6% net return per year? (Or am I being too enthusiastic)?

Finally, what are the differences between stocks and shares please? (yes my current knowledge really is that basic)

Cheers again!

If you want to learn about stock market investing, try a book called "A Random Walk Down Wall Street" (Amazon Link).

If I were you, I'd start off with a couple of cheap index tracking ETFs (perhaps a UK one tracking one of the FTSE indices and a European one or something) as it'll give you diversification from day 1 and look at buying individual stocks as your confidence and knowledge grow.

The Halifax do an account that seemed good to me from a supficial glance at least that allows you to pick some stocks and buy a few quids worth each month. I've not checked it out properly so DYOR.

Jazzyjeff_2

Gosh this thread has certainly caused lots of arguments hasn't it!!!

Most of the debate between buying and renting can be summed up:

- The difference between buying and renting is the same as between a bank account and the stock market. In the long term its better to buy because the average increase is something like 11% per year in house prices, whereas savings accounts around 6%.

- HOWEVER as with shares its all about buying at the right time, If you buy at the bottom you will make a packet. If you buy at the top you will have lost loads.

INCORRECT STATEMENTS-

- It's beyond me how people can say renting is dead money still. Mortgage payments & rent = same thing, the difference is putting money into savings compared to equity in a house (how can people still be silly enough to say in 20 years time I'll have £200k in equity and you'll have nothing...DUH!!).

- Renting is NOT always more expensive, I rent a £220k flat for £800 per month. £220k mortgage at 6% interest = £1,100 per month. Plus I don't pay for any repairs or buildings insurance etc.

- A bad rental is the same as a bad house purchase. You can rent a bad property same as you can buy a bad one. The trick is to do your research properly and hope you have good luck. After all you can buy a house and they could then put a mobile phone mast right next to you = bad luck for you.

- Some people seem to think a mortgage is like a money tree, once you get one money will fly your way. A large % of BTL mortgages these days the rent doesn't even cover the mortgage payments - some by quiet a bit. The buyer is obviously taking a risk on house prices NOT sitting on a caribbean island thinking hehe that magic money tree is doing well. This incorrect view is partly why prices get pushed so high and will also be the cause of many reposessions during the next crash.

At the end of the day it comes down to personal choice as to which you prefer and also what you expect will happen to the market - just like SHARES!

brasso

Jazzyjeff wrote: »

INCORRECT STATEMENTS-

- It's beyond me how people can say renting is dead money still. Mortgage payments & rent = same thing, the difference is putting money into savings compared to equity in a house (how can people still be silly enough to say in 20 years time I'll have £200k in equity and you'll have nothing...DUH!!).

I don't understand your point, Jazzyjeff. Paying rent is not "putting money into savings". Paying rent is paying off some other bloke's mortgage for him.

Jazzyjeff wrote: »

- Renting is NOT always more expensive, I rent a £220k flat for £800 per month. £220k mortgage at 6% interest = £1,100 per month. Plus I don't pay for any repairs or buildings insurance etc.

I'm puzzled by that, too. Who is saying that renting is more expensive than buying? It's rarely true these days. You're paying £800 a month to someone else for nothing apart from immediate shelter. I pay £1400 a month on my mortgage (including overpayments) which is a hell of a lot, but in 7 years time it will all be paid off, and if we don't move (and we've no intention of moving), we will never have to pay a penny in rent/mortgage ever again. Do you not see the difference?

In the example you quote, the mortgage is £300 more per month than your rent. But the mortgage-payer is paying off a loan. Every monthly payment represents another chunk of equity. Your £800 is gone forever. And £800 every month is a very large sum of money to throw away.

Sorry, I don't mean to sound like I'm gloating. I do feel really sorry for people who are genuinely priced out. But the fact is that long-term renting, unless it's a peppercorn rent, is bad news. And I speak as someone who has rented for most of my adult life.

Jazzyjeff_2

brasso wrote: »

I don't understand your point, Jazzyjeff. Paying rent is not "putting money into savings". Paying rent is paying off some other bloke's mortgage for him

I do understand that but do you not get that there are 2 elements to a mortgage payment - Interest AND repayment. There are also 2 steps to my renting - rental payment AND money I put into my ISA and savings accounts.

brasso wrote: »

I'm puzzled by that, too. Who is saying that renting is more expensive than buying? It's rarely true these days. You're paying £800 a month to someone else for nothing apart from immediate shelter. I pay £1400 a month on my mortgage (including overpayments) which is a hell of a lot, but in 7 years time it will all be paid off, and if we don't move (and we've no intention of moving), we will never have to pay a penny in rent/mortgage ever again. Do you not see the difference?

In the example you quote, the mortgage is £300 more per month than your rent. But the mortgage-payer is paying off a loan. Every monthly payment represents another chunk of equity. Your £800 is gone forever. And £800 every month is a very large sum of money to throw away

You're wrong again there I'm afraid. I pay £800 in rent but what about the fact that in 7 years time I will have a whole load of savings from not making mortgage REPAYMENTS. Your being really silly, how can seriously write that its throwing money away - if thats the case then so is paying the interest element of a mortgage!!!!!!!!

You can't compare what you pay to what I pay, the fact is that the property I rent I would pay £1,100 INTEREST ELEMENT NOT INCLUDING REPAYMENT. So I am saving £300 every month :beer: . The only way I can lose is if property prices keep shooting up!!

Why is it so hard to understand that buying and renting is like the stock market, in the short term you are gambling but in the long term its better to buy?? Just like in the long term its better to have a balanced portfolio of shares than invest in a savings account.

brasso wrote: »

Sorry, I don't mean to sound like I'm gloating. I do feel really sorry for people who are genuinely priced out. But the fact is that long-term renting, unless it's a peppercorn rent, is bad news. And I speak as someone who has rented for most of my adult life.

I can afford to buy somewhere but I'm choosing not too because I'm personally predicting prices will fall over the next few years. Where did I say long-term renting was better?? In fact I said the opposite.

It's so short sighted to say that either option is better and everyone should take that option. I often find *no offence* that the older generation have been so brain washed by Maggie Thatcher that they find it impossible to see that there is actually a choice.

brasso

I've been accused of many things in my time, but being 'brainwashed' by the appalling Thatcher is a charge that I'd never have predicted.

I regard myself as a Thatcher survivor, not a Thatcher acolyte.

Of course I understand that my mortgage payment contains an element of interest. I can tell you how much: 17%. Which means that 83% of what I pay goes on the capital. I'd be happier if it were more, but there we are. What I do know is that in 2014, 7 years from now, we'll never pay another penny in mortgage or rent, and this is what you haven't acknowledged.

I commend you for not buying at the moment. Personally, I think that HPI is grinding to a halt as we speak. I don't expect a dramatic crash, but it may happen. Who knows?

You'll be surprised to hear that I accept much of what you say HOWEVER, like most renters these days, you're getting good short-term value for money, but bad long-term value.

You're getting a nice place to live for 'only' £800 a month and saving your £300 a month. Well done you. But you have to measure that £3.5K a year 'saving' against HPI in recent years. I'm not going to lower myself to start talking about all that 'how much my house is worth' rubbish, but needless to say, the annual appreciation over the last 6 years is hugely more than £3.5K.

HPI will decelerate and may even go Y-o-Y negative eventually but I stand by what I say, that I'd rather be in my position than yours.

But I don't want to seem nasty, and I wish you well. I hope you're doing something great with your savings. I'm a HYP fan, and can recommend the strategy.

Jazzyjeff_2

OK I agree with some of what you say here, we're not that far off.

I agree that long term buying is much better because of HPI, although I did say that in my first post.

What I don't agree with is the proposal that buying is better because in 7 years you'll own your own house, becuase the only gain you are getting is from HPI. Put it this way the equity in your house you are not earning any interest on or return from shares are you? So you're only real gain over renting is HPI because if HPI is 0% then renting is possibly better (depending on how much rent you pay) and so in 7 years I could use my savings and buy a bigger house than you...

All I'm trying to say is HPI is the only factor in the buy/rent debate. So it boils down to whether you think this is going up or down in the short term.