How would you invest in my situation

sean9461

I would love to be able to do a self build hopefully before I'm 40. Maybe have a 200,000 deposit and a 300,000 mortgage by then.

I have just been accepted for a mortgage 115000 house 4 bedroom really good area that's constantly increasing in value. With only a 95000 mortgage.

I've got the mortgage over 30 years however I adjusted the direct debit to overpay so that I would have paid the mortgage off in 10 years if I keep up the same direct debit.

I'm currently earning around 4000 a month after tax

I have very little costs as things like the car and insurance are all paid for as the mother in law gets a motability car that I drive for her.

I will have around 2500 disposable income every month after overpaying around 1000 a month on a mortgage

So my question is, what would people do to invest? I'm constantly contemplating buying up more houses and renting out. I know tenants can be a problem that's why I was considering a house for the mother in law first as I know the rent would always be paid but after that a 3rd house could be complicated with bad tenants.

Other than buying properties I currently have no clue about any other investment options. I've tried to look into stocks and share isas etc but I can't seem to find any details of profits anybody has ever made. I know it's random and depends on market but I'd expect to be able to see people saying that they made a 10% return this year or something along those lines but I've found nothing.

Any opinions or advice would be great thanks

masonic

sean9461 wrote: »

I've tried to look into stocks and share isas etc but I can't seem to find any details of profits anybody has ever made. I know it's random and depends on market but I'd expect to be able to see people saying that they made a 10% return this year or something along those lines but I've found nothing.

There is quite a nice discussion around returns from investing here: http://monevator.com/passive-expected-returns/
...and also plenty of other useful information about investing in S&S on that site.

One thing you don't mention is how long you have to invest for this self-build goal. Putting money into the stock market should only really be considered over the long term (10+ years) because over shorter time frames the chances of losing money are much higher.

Being a landlord is a business really, not an investment. If you are ok with the extra effort involved, then it might be quite lucrative, but it does put your eggs in one basket.

sean9461

masonic wrote: »

There is quite a nice discussion around returns from investing here: http://monevator.com/passive-expected-returns/
...and also plenty of other useful information about investing in S&S on that site.

One thing you don't mention is how long you have to invest for this self-build goal. Putting money into the stock market should only really be considered over the long term (10+ years) because over shorter time frames the chances of losing money are much higher.

I would love to self build at around 40 I'm currently 22 so 18 years from now would be ideal. Just in general I would like to be able to invest wisely to leave behind a good future for kids/grandkids later in life

slowpoke_rodriguez

One great thing about stocks and shares is that you can spread your risk around or concentrate on rising sectors as you see fit. With a property, all your eggs are in one basket. If the property market tanks you may be left with an asset you have to sell but can't without taking a substantial hit.
Personally, I don't think there's a lot of money still to be made in BTL. Some people have done very well out of it in the last few years, but I think those days are gone.

sean9461

slowpoke_rodriguez wrote: »

One great thing about stocks and shares is that you can spread your risk around or concentrate on rising sectors as you see fit. With a property, all your eggs are in one basket. If the property market tanks you may be left with an asset you have to sell but can't without taking a substantial hit.
Personally, I don't think there's a lot of money still to be made in BTL. Some people have done very well out of it in the last few years, but I think those days are gone.

How much would you estimate you make from stocks and shares?

I know that it's a broad question and full of estimates but say the stocks and shares do moderately well over 10 years and don't drop is it likely to be just be for example 5% interest average over the 10 years or more like maybe 20% I have no clue

Thanks

JohnRo

It's a dice roll, no one knows what's going to happen in 10 years, what everyone knows is stocks and shares will fall and they will rise, the chances of that resulting in a positive outcome increase significantly the longer you're invested and depend to varying degrees on what you've started out with.

Over 10 years you'd reasonably hope and expect to come out of a sensible equity investment ahead of the same amount held in cash savings. No guarantee though and how much ahead is anyone's guess.

If I had to pick a number it'd be much closer to an equivalent 5% interest than 20% percent a year but that doesn't mean either is more or less likely at this point, I'm just using gut feeling and some historic perspective.

If you're after certainty and fixed results then investments in stock market equity obviously aren't the place to be looking.

masonic

sean9461 wrote: »

How much would you estimate you make from stocks and shares?

I know that it's a broad question and full of estimates but say the stocks and shares do moderately well over 10 years and don't drop is it likely to be just be for example 5% interest average over the 10 years or more like maybe 20% I have no clue

I've managed an average of about 8% a year over the last 10 years or so. That means if I'd have invested a lump sum 10 years ago, it would be worth a little more than double that now. Of course, I bought my investments gradually over that timeframe, like most people do, so money I've added later when markets were higher, has not achieved the same result as money I was able to put into the market at the pits of the 2008 financial crisis. The link I posted above gives a reasonable figure of around 5% + inflation for average stockmarket return. That's the figure I'd use if I wanted to project forward. It is useful to separate out inflation, because the £200,000 deposit you think you will need now will no doubt be a higher number in £ in the year 2034.

slowpoke_rodriguez

sean9461 wrote: »

How much would you estimate you make from stocks and shares?

I know that it's a broad question and full of estimates but say the stocks and shares do moderately well over 10 years and don't drop is it likely to be just be for example 5% interest average over the 10 years or more like maybe 20% I have no clue

Thanks

Last year I made just over 10% including dividends.
During January I lost it again. During February I got it back again and more. So over a month I'm up 25%, but over a year I'm still only up 25%. There's plenty of time to lose it again yet though.
If you make, on average, 10% you're doing very well, but it only takes a couple of investments to do particularly well or badly and that can change rapidly.

If you're thinking of investing in Shares I suggest reading "The Naked Trader" by Robbie Burns. He'll tell you the basics and suggest further resources.
Also read Investors Chronicle, online or out every Friday. Beware some of the tipsters but it'll help you get your bread head on.

sean9461

Are there any other investment options other than houses, stocks and shares, and regular savings accounts?


Thanks

Thrugelmir

Buy some premium bonds.

Eco_Miser

sean9461 wrote: »

Are there any other investment options other than houses, stocks and shares, and regular savings accounts?

Thanks

Bonds, which are loans to companies or governments; commodities, such as grain, oil, metals; P2P loans; property other than houses; and a load of other stuff which are probably scams.

Also you don't need to buy shares to invest in shares, you can buy funds, which are collective investments in lots of companies' shares, and much less likely to be a total loss.