Equities, why am I so irrational?

Ryan_Futuristics

Voyager2002 wrote: »

No. The rental income depends upon people having jobs near to your property and earning reasonable wages from their work... something that would also mean that shares in the companies that employ them would be doing reasonably well.

Visit somewhere like the west end of Morecambe, or the centre of the city of Newark in the US State of New Jersey. These are both areas that at one time were prosperous, but where employment collapsed leading to a glut of very cheap property.

True, and you could sell a 2 bedroom detached here and buy up a whole street in some parts of Detroit ... But buy near London and you know rental demand will be there for quite some time - although I've been predicting some capital flight from London

We've got a generation now who've never experienced a rates rise on their mortgages - I'm surprised more people aren't talking about what might happen when that collides with current London overvaluations, and often below 2% yields

gadgetmind wrote: »

As long as companies continue to provide goods and services that people need, we should keep ticking along.

We have some large problems to solve, but just a few key technologies need to drop into place, and we're much if the way there.

We could *just* keep ticking along across broad markets - rather than experiencing 20th century levels of growth ... It's difficult for me to see where broad or sustainable growth is supposed to come from now, and world market valuations are probably running a little high

Thrugelmir

Masomnia wrote: »

The government will never let property crash: near-zero interest rates, planning policy, QE, inertia with regard to house building, favourable taxation, £20 billion per annum housing benefit, all conspire to keep prices up. I think you know deep down you're never going to get the sort of crashes you'll see with shares from time to time as it just won't happen for political reasons.

Don't confuse the saving of the financial system with Governments letting the property market crash. Property has been a beneficiary of Government policy. That's all. Governments simply don't have the financial fire power in the locker to direct markets in any given direction. Buyers and sellers will ultimately do that.

gadgetmind

Ryan_Futuristics wrote: »

It's difficult for me to see where broad or sustainable growth is supposed to come from now

It's the sustainable elements that worry me, particularly as fossil fuels are currently critical for much more than energy.

http://en.wikipedia.org/wiki/Ammonia_production#Sustainable_ammonia_production

Ryan_Futuristics

gadgetmind wrote: »

It's the sustainable elements that worry me, particularly as fossil fuels are currently critical for much more than energy.

http://en.wikipedia.org/wiki/Ammonia_production#Sustainable_ammonia_production

Yeah, all sorts of bottlenecks we're about to run up against - peak phosphorus too - I think there are more growth booms to come, but it'll take another leap ... whether the next one is AI, quantum computing or space mining, right now I'm trying to gear my portfolio to take advantage of market inefficiencies

masonic

Seems like it is future generations that will run into these sorts of problems, no? Doesn't seem the effects will be felt for quite some time.

inflationbuster

I have a property but l also trade the markets. Love the latter. The rent has almost been trouble free but the capital gain on the property has not been great compared to my stock returns.

If l got a good offer on the property I'd sell and trade more in the markets.

Ryan_Futuristics

masonic wrote: »

Seems like it is future generations that will run into these sorts of problems, no? Doesn't seem the effects will be felt for quite some time.

And markets might be booming if we're investing in lunar mining corporations by then

There was a similar thing in the 19th century when it looked like we were about to run out of whale oil - then we discovered kerosene ... And again with copper wire for cross-channel communications, then we discovered fibre optics

But I think one of the first bottlenecks we're already pricing in is the ageing population - that's looming over developed markets, and even China ... it's why so many UK funds are focusing on healthcare and tobacco (anticipating an older population over here and a smoking population in Asia)

kidmugsy

chucknorris wrote: »

But we can sell 2 houses (to the value of 20% of our total property value), but that wasn't actually the point.

But can you sell while avoiding CGT? You can with shares, either by holding them in pensions or ISAs, or by selling them in carefully chosen amounts each tax year. And if your shares were actually mutual funds or ETFs, you can be fairly confident that they'll be liquid. Property you can get stuck with for months or years, or face firesale prices.

Anyway, what exactly was your point? Are you hoping that some of us are psychiatrists?

chucknorris

kidmugsy wrote: »

But can you sell while avoiding CGT? You can with shares, either by holding them in pensions or ISAs, or by selling them in carefully chosen amounts each tax year. And if your shares were actually mutual funds or ETFs, you can be fairly confident that they'll be liquid. Property you can get stuck with for months or years, or face firesale prices.

Anyway, what exactly was your point? Are you hoping that some of us are psychiatrists?

You ask if I can avoid CGT, of course I can’t, but what has that to do with anything? You seem to think I am talking about the choice of investing in property (from scratch) v shares, I'm not, I’m talking about selling existing property and moving the equity into shares, which I think was obvious from my original post, and my (probably irrational) concerns about the move. It is a significant amount of money, hence my caution. In fact CGT is one of the barriers, we face a substantial CGT bill, which I think that will put my wife off, but I am more motivated and will probably proceed and sell my properties. We haven't invested in property for years, and have no intention of investing further.

Most of my future investment will be in shares, as it was last year, I have already invested about £600k (most of it last year when moving away from cash), and I will invest more going forward. But it is the amount of further investment from my existing property portfolio that is under consideration, not investment from new income, which will certainly go into shares.

As for your 'psychiatrists' comment, well I'm just going to ignore that, I haven't got the time to get involved in pointless petty arguments.

But once again thanks to everyone else, it was useful to read what you said, even more so because you echoed many of my own thoughts. It is a sizable amount of money that I intend to switch into shares from property, deep down I know it is the right decision, but it is a big decision and I feel the need to tread carefully.

chucknorris

inflationbuster wrote: »

I have a property but l also trade the markets. Love the latter. The rent has almost been trouble free but the capital gain on the property has not been great compared to my stock returns.

If l got a good offer on the property I'd sell and trade more in the markets.

It sounds like you haven't been in the market long, I bought in the early and mid 90's in London, so the capital gain has been good, I can't complain about the rental income either. But I'm 57 now and I'm thinking 10 years ahead at a time when I probably want to wind down. Also we have an awful lot of equity to sell and spend (no children), so I need to access that equity at some point, and that would be best done before the next correction in the property market.