How did you perform during the recession?

Graham_Devon

LydiaJ wrote: »

I'm happy, though, that I've got a lovely house in a nice area and my kids can go to a good school.

Trying to do the same.

Trouble is, the "suitable" houses are few and far between. There are some building programmes going on at the moment, however, there is some controversy in that as they were supposed to be for "local" people. I.e. having lived in a 5 mile radius for 3 years. (Due to massive problems of affordability and a bit of second home ownership).

However, it seems investors also target school catchment areas as the rents achieveable are higher. And they seem to be excluded from this local attachment thing as the homes will still be used by local people. So 3 houses are built and all 22 others have been bought off plan.

Bit of a nightmare really. Not quite sure where people (bar investors) are getting the money from as these were supposed to be affordable homes. But they are a smidge under 200k and the local average wage is 17k.

wotsthat

Graham_Devon wrote: »

Just look at London for instance. Who would have thought at the time of the crash that the financial hub of europe would turn out to be the safe haven of europe. It's a bizzare turn of events where the most exposed city (arguably) becomes the safe haven. Who would have thought that bankers would have been some of the greatest beneficiaries of the crash? Who would have thought those investing in financial shares would have seen the massive turnaround? As said on here, it's surprised even the investors!

This is a land of opportunity. We all enjoy a little UK knocking but it would be unwise to start thinking it's anything other than a dark hobby.

Loughton_Monkey

Graham_Devon wrote: »

To me, and I have to make out I'm at pains to point out this is not directed at anyone on here, just a general observation....

...this thread just highlights the more common theory out there at the moment.

The rich got richer and the poor got poorer.

I love the way you just sort of "assume" that these 'common theories' [as you call them] just happen.

When will you realise that it's got nothing to do with recession or boom. Doesn't matter. There are some people who simply 'do the right thing' and there are those that don't. It doesn't matter what the economic climate is.

Just breaking it down to basic and simple things.....

There are people who are passionate about living within their means. Earn £1 and save 1p and you are "richer". This is common sense to some people. For others it simply doesn't make sense for whatever reason, and for these people - recession or boom - they will not do well.

People who prioritise things - like buying a house - are different from those who prioritise either 'having a good time' or perhaps 'starting the family life first'. This is why people like me keep on about "choices". People who did well [most of them anyway] didn't do it by luck, or inheritance, or lottery win, or because they have 'talents' that others don't have.

Everyone (including myself) starts on "low income". Just how low this is probably depends 90% upon choices you made at school as between taking it seriously, or mucking about. That's another story.

But at any reasonable 'low income' you shouldn't sit there griping about 'low pay', you should budget well, save hard, and invest as soon as you can. A house is a perfect vehicle for this. Two birds with one stone! Intelligent people realise this.

While you are "struggling" to buy yourself your first home, you have the double advantage of (a) having nailed a good investment down and guaranteed a good start, and (b) of necessity learned how to live on a relatively small proportion of your income.

Once things get better. The mortgage deflates away. Maybe you trade up. Maybe you give yourself a tiny 'reward' of a slightly higher lifestyle but at the same time, find that shoving a few shillings in an ISA, or extra pension makes some sense.....

While all this is going on, you are living in "relative poverty" compared to the guy at the next desk earning the same, who doesn't choose to adopt the same lifestyle. He has a better car. Goes out clubbing rather more often. Has exotic holidays. But lives at home......

By any yardstick, this is "relative poverty" but no charity or lobbying group takes pity. Nobody gives any 'sympathy' and personally I wouldn't want it or expect it. I am building my wealth by investing for tomorrow what could be spent today. By thinking about it and planning what I do with every penny. By sacrificing holiday after holiday, or new furniture, or purchasing shiny new "stuff" that others have. By taking a bus when peers are all buying cars.....

As night follows day, when the recession comes, prudent financial behaviour [as opposed to simply being 'rich'] gives one the resilience to ride it. More financially ignorant or profligate people will suffer a lot more. Basic common sense.

I always thought "The world doesn't owe you a living". Everything you say seems to come from just the opposite sentiment that the world does owe a living - especially to those who have had all the same opportunities but blew them.

This is why you and I will seldom agree on these matters.

So-called "rich" people like myself had no special privileges. No advantages. No 'edge' in life. No more opportunities than the lad next door. No special god-given talents. No windfalls. No 'magic' business acumen that made us invent google or facebook. Just humble employees who took a career seriously and worked hard. Recognised that £1 invested rather than £1 spent was worth far more than the £2 difference.

I don't believe you will ever understand this. Hence I don't believe you will ever be "rich". You will sit there forever thinking that only the government or taxpayer or political action is the reason you are where you are rather than anything to do with your own actions (or lack of them).

Thrugelmir

Graham_Devon wrote: »

Maybe I shouldn't have said anything at all. I just thought this thread (and again, at pains not to highlight anyone or direct it at anyone) highlights the common theory that this recession has made the "rich" richer and the poor poorer.

If you manage your finances well throughout your working life. Then as you get older you will be "richer". My investment in shares, primarily now held in a SIPP. Has come from decades of saving and reinvesting the income. There's no magic money tree in my back garden.

Loughton_Monkey

Thrugelmir wrote: »

If you manage your finances well throughout your working life. Then as you get older you will be "richer". My investment in shares, primarily now held in a SIPP. Has come from decades of saving and reinvesting the income. There's no magic money tree in my back garden.

As simple and correct as this is, I am convinced that a lot of younger people - because of a general lack of financial 'savvy' - don't fully appreciate this fact. This is partly why 'boomers' are identified as "rich" because we 'had it all'. Nothing could be further from the truth.

Houses, and to an extent businesses, have a 'fundamental' value. For houses it is the cost of land + building. For businesses, it is the level of profits they can make in 'normal' times.

Provided the shares are well spread (there will be some casualties) they can only bounce back. The only unknown is the time that will take. And in between, you can make more by simply throwing more in at the 'bargain' prices.

Dev's assertion that the 'rich get richer' it utter drivel in terms of the immediate period after recession. However rich you are, you will lose a pile on paper. Far more than the poor person because they have little to lose. But as a general rule it will bounce back if you hold your nerve.

Same with income. Recessions can lose you jobs. If you have savings/invesments, it prevents you having to jump at the 'quick' available job on 2/3rd previous salary. I have 'lost' mine about 3 times [but not necessarily unexpectedly], and each time I have held out for [and got] something in the order of 30%/40% better salaries - obtained only after making a "full time job" of getting re-employment, rather than sitting back and whinging.

Things like this are 90% down to personal effort, and only 10% down to external factors.

LydiaJ

Graham_Devon wrote: »

Trying to do the same.

Trouble is, the "suitable" houses are few and far between. There are some building programmes going on at the moment, however, there is some controversy in that as they were supposed to be for "local" people. I.e. having lived in a 5 mile radius for 3 years. (Due to massive problems of affordability and a bit of second home ownership).

However, it seems investors also target school catchment areas as the rents achieveable are higher. And they seem to be excluded from this local attachment thing as the homes will still be used by local people. So 3 houses are built and all 22 others have been bought off plan.

Bit of a nightmare really. Not quite sure where people (bar investors) are getting the money from as these were supposed to be affordable homes. But they are a smidge under 200k and the local average wage is 17k.

Hope you manage to sort something out.

I know that up until just over 4 years ago, I was feeling as though I'd never be able to buy a place for my kids and me. And yes, as the others have said (and as Hamish said to me when I moaned about it on here back then, I think) that was because of my choices. Not, I must say, choices to go clubbing and have foreign holidays, but choices to put my time and money into supporting my then husband in a career that was a very worthwhile and "making a difference" sort of thing, but not very lucrative (although it did come with tied housing). Then I chose (that word again) to have kids, thinking that my husband would stick around while they grew up. Then when he left me I was pretty stuck as far as housing was concerned.

I hope for your sake (and for your kid's sake) that you don't get your housing problems solved the way mine were, because life insurance payouts only happen after a death, and watching your child suffer through losing a parent isn't something I would wish on anyone, but I do hope you find a way to think outside the box and come up with ways to provide the future you want for your kid (or is it kids now?), even if it's not the way you thought things would pan out.

Good luck!

purch

How did you perform during the recession?

Reasonably well I think.

I was relatively positive for most of the period, which after reading some of the tosh on here was easier said than done some of the time.

IveSeenTheLight

Joeskeppi wrote: »

I saved a small fortune thanks to low interest on my mortgage. The only shares I have are through my work's share scheme which is actually quite generous, I'm 500% up on that.

I also was fortunate to keep getting decent pay rises/promotions throughout it all as well, 35% pay rise altogether since 2008, hoping for around 8-9% this year.

I guess some of that is offset by my gaff being worth about 10% less.

I'm quite similar.
Saved a fortune on mortgage interest.
Invested in two additional BTL's (Jan 2007 (ok just pre-recession) and Dec 2012), both of which are valued higher than they were purchased for when bought.
Stayed away from shares, although admit there are examples of shares which have performed extremely well and many more that havent)
I've increased my salary by 59.4% since end of 2008, although there has been one promotion in that time. I'm now working towards my next significant promotion in the next 4-5 years.

All in, the recession has resulted in my nett wealth significantly improving.

IveSeenTheLight

Graham_Devon wrote: »

So 3 houses are built and all 22 others have been bought off plan.

In my neck of the woods, buyers inevitably need to buy off plan to get the best choice of properties in that area.
Those that complete building before selling are usually the less desirable properties, but, do then get better deals (stamp duty paid, carpets etc)

N1AK

chucknorris wrote: »

When I used the term recession I don't mean the technical definition of a recession I just mean the downturn in the economy generally related to house and share prices.


I think I performed almost as badly as the English cricket team:

I'm going to give a thanks, and congratulate you for being willing to start a subject in which you don't feel obliged to make yourself look good to defend a fragile ego :T

I also probably didn't play it brilliantly. We did buy in 2011 but I've been far too passive in terms of my careeer and investing. I didn't get into stocks until 2012 so missed the majority of the recovery.

Lessons learnt: Buffet may not be the savant that many think he is but "Buy when others are selling" seems to be one of the few genuinely smart bits of investing advice out there.