Investements, Alternative to Mortgage

bigmaz

Hi guys

Just wondering if I could get some opinions on this.

First of all, we currently rent our house. We have made a decision to keep doing this, as to get a mortgage, we would have to downgrade big time, and thats not something we want to do. I know people will find this very strange, but its our choice, and it suits our circumstances.

Anyway, what other alternative investments can we look at, getting prepared for the future?

kingrulzuk

bigmaz wrote: »

Hi guys

Just wondering if I could get some opinions on this.

First of all, we currently rent our house. We have made a decision to keep doing this, as to get a mortgage, we would have to downgrade big time, and thats not something we want to do. I know people will find this very strange, but its our choice, and it suits our circumstances.

Anyway, what other alternative investments can we look at, getting prepared for the future?

Good 4 U and Good Luck

jimjames

Plenty of investment opportunities are available. You could use S&S ISAs or pension depending on your requirements and existing provision.

If you look at www.monevator.com you'll find some ideas to get started.

bowlhead99

What other preparations do you have for the future. Presumably on retirement you will need income sufficient to pay rent and all other living expenses for 40 years or so. How are your pensions looking so far, against your expected outgoings?

Presumably if you would rather rent a place that you couldn't afford to buy, rather than compromising your standard of living, then you have not been able to stash away much in pensions and S&S ISAs so far? Will you at least be willing to compromise that standard of living when you lose your jobs? If not, you might find it rather abruptly enforced anyway.

What other alternative investments can you consider? Well presumably anything on the planet. The common things to do include having a portfolio of investment funds which holds shares and bonds and commercial real estate and other assets from around the world, held tax-efficiently in pension and ISA wrappers so they grow faster than inflation over the long term.

Obviously a pile of cash for emergencies is good too. And maybe some peer-to-peer lending offers a slightly better return than cash without as much perceived risk (or as good a return) as equity funds.

Without you telling us what investments you already have and what your goals are, it is difficult to do anything other than generalise. Buying a house to live in is an obvious one because you presumably need something to live in for the next 40-80 years (you haven't given an age or timeline).

Without knowing much about your aspirations (other than not to "downgrade" until as late as possible) or the amount you can put away or the risk you can afford to take with your capital, or the return you need, you will not get high quality replies. Post #2 above is the best you can expect, given the lack of information.

Porcupine

Time to invoke Monevator:

http://monevator.com/a-mortgage-is-money-rented-from-a-bank/

That said, it can be a finely balanced question. If you rent, you pay rent and get someone to maintain your house for you (in theory). If you have a mortgage, you pay money rent ('interest') and maintain it yourself.

It can be worth doing the sums as to how this works out. A mortgage isn't always cheaper. It's just another asset class - is residential property a better investment than stocks and shares long term? Who knows. Plus of course they may not let you take out a mortgage large enough, even if it's cheaper than your current rent.

OTOH mortgage rates are low so gearing is cheap - use small amount of money to borrow large amount of money, which magnifies your gain (but also increases your risk if prices fall). And you can't gear stock investments as much as you can property ones.

bowlhead makes a good point about what happens when your circumstances change. Are you prepared to move if you can no longer pay the rent from your income? If not from income, how long can you afford to pay the rent from savings? Would that compromise your ability to get further work (for instance, if you live in London it's a lot cheaper to move to Grimsby - but there's less jobs in Grimsby). Worth considering what happens in the case of 'can't pay the rent' v 'can't pay the mortgage' - I don't know if the mortgage case is more lenient regarding kicking you out.

bigmaz

Thanks guys for your helpful replies. You are right, I need to give more info. I will reply later with more details. I'll also look at that link that a few have mentioned too.

(I knew the rent thing would not go down well, hehe)

Thanks again

Thrugelmir

bigmaz wrote: »

(I knew the rent thing would not go down well, hehe)

That's a personal choice suits some people and not others. Once you own your home the security if offers is priceless. The value of the property who cares.