'We've reached a tipping point' Signs of house price weakness

In_For_A_Penny_2

chucknorris wrote: »

That appears to be a very significant investment in shares, how do you feel about knowing that at some point that there will probably be a significant correction? That is what has been holding me back previously, but I have come around a bit now, thinking that what goes down will go back up again (funds not individual shares). But I still have some discomfort when you see that the ftse 100 isn't any higher than it was 15 years ago, whereas property historically has managed to recover corrections and increase above previous peaks.

The same could be said for the average person living in this country who are significantly over invested in a single asset class - namely housing. For most I would suspect their home is closer to 100% of their entire assets.

Possibly OK for people for whom it is simply a place to live but for many on these forums talking about "how much they have made" on their property they don't realise how over-exposed they are.

mystic_trev

chucknorris wrote: »

That appears to be a very significant investment in shares, how do you feel about knowing that at some point that there will probably be a significant correction? That is what has been holding me back previously, but I have come around a bit now, thinking that what goes down will go back up again (funds not individual shares). But I still have some discomfort when you see that the ftse 100 isn't any higher than it was 15 years ago, whereas property historically has managed to recover corrections and increase above previous peaks.

Chuck - I'm Invested in a couple of funds but mainly Individual shares. It's also a hobby that helps pay my Pension, and keeps the old grey cells active! My returns in the last few years have been excellent, and the dividends an added bonus. This years been mixed and I'm currently down on the Year. If there's a slump, so be it, but as you say the Markets still down on 15 years ago.

I'm hardly a Property magnet, as my brother lives in one and my Mother another, and of course ones my home,so that leaves two rented out.

Percy1983

You could say I am over invested as my house as the only 'investment' I have.

But then again I didn't buy it as an investment, I bought a home.

Jack_Johnson_the_acorn

Percy1983 wrote: »

You could say I am over invested as my house as the only 'investment' I have.

But then again I didn't buy it as an investment, I bought a home.

You're clearly a HPI addict, you support liar loans and are definitely over leveraged. You sheeple will get what's coming to you. Typical HPC Response.

chucknorris

In_For_A_Penny wrote: »

The same could be said for the average person living in this country who are significantly over invested in a single asset class - namely housing. For most I would suspect their home is closer to 100% of their entire assets.

Possibly OK for people for whom it is simply a place to live but for many on these forums talking about "how much they have made" on their property they don't realise how over-exposed they are.

It isn't the same thing at all, I am talking about investing (well) over the value of a home to provide an income and obviously not leveraged. The primary function of a home, is to provide a home, not an income.

chucknorris

mystic_trev wrote: »

Chuck - I'm Invested in a couple of funds but mainly Individual shares. It's also a hobby that helps pay my Pension, and keeps the old grey cells active! My returns in the last few years have been excellent, and the dividends an added bonus. This years been mixed and I'm currently down on the Year. If there's a slump, so be it, but as you say the Markets still down on 15 years ago.

I'm hardly a Property magnet, as my brother lives in one and my Mother another, and of course ones my home,so that leaves two rented out.

Ok I understand Trev, it looks like you get a buzz out of it, I want to be more of a passive investor. At the moment I have only invested in the ftse 100 and ftse allshare trackers, I realise that there is a need for diversification, and I will seek to get that with the ftse 250 and some global trackers. But I do look at the history of the ftse performance and wonder what the long term value will be.

Thrugelmir

chucknorris wrote: »

But I still have some discomfort when you see that the ftse 100 isn't any higher than it was 15 years ago, whereas property historically has managed to recover corrections and increase above previous peaks.

That's because the constituents of the indices change every quarter. Around 60% of the "gain" in shares come from reinvesting the dividend income. As Albert Einstein said when describing the 8th Wonder of the World "He who understands compound interest receives it , he who doesn't pays it".

robmatic

Percy1983 wrote: »

You could say I am over invested as my house as the only 'investment' I have.

But then again I didn't buy it as an investment, I bought a home.

I don't get this idea that people are 'over-invested' or 'over-leveraged' simply because they have a mortgage. If you have a need for a home, which applies to most people, you have a big liability to meet. Seems a bit stupid to be smug about this liability being in the form of rent rather than mortgage payments. Both involve having to shell out fairly significant amounts of cash and both have fairly negative consequences if you don't make the payments every month.

ChopperST

chucknorris wrote: »

Ok I understand Trev, it looks like you get a buzz out of it, I want to be more of a passive investor. At the moment I have only invested in the ftse 100 and ftse allshare trackers, I realise that there is a need for diversification, and I will seek to get that with the ftse 250 and some global trackers. But I do look at the history of the ftse performance and wonder what the long term value will be.

Off topic chuck you are aware that the FTSE 100 and all share overlap by about 80% Did you look at the Monevator pages anymore to get a better idea of diversification?

chucknorris

Thrugelmir wrote: »

That's because the constituents of the indices change every quarter. Around 60% of the "gain" in shares come from reinvesting the dividend income. As Albert Einstein said when describing the 8th Wonder of the World "He who understands compound interest receives it , he who doesn't pays it".

But with the dividend income added it still only comes to about 3.2% PA (as discussed on the other thread in the savings and investment board), which doesn't sound that bad, but not so great either.