5% yield REITs - too good to be true?

Fulham_Mark

thanks all.

I seem to be in a similar position to some others on here.
Have a lot of money in P2P but don't want to go over 20% total in this. Have some income funds, a EURO fund that keeps going up, and have a two long term savings accounts that are nearing end of term. So have way too much cash and want income.

So may go into UK equity income and REITs slowly whenever prices drop

bowlhead99

Fulham_Mark wrote: »

So have way too much cash and want income.

So may go into UK equity income and REITs slowly whenever prices drop

If you're looking to diversify outside cash and mainstream equities for income, another alternative asset class is companies which invest in infrastructure projects.

For example InfraRed's "HICL Infrastructure" and Amber Infrastructure's "International Public Partnerships" both currently yield 2-3% even though their share price is at a premium to the value of their underlying assets. Both had successful, oversubscribed fundraisings in the last month or two to get a few hundred million of new capital in the door to invest in further very long term projects.

Not recommending them to someone new to REITs and Investment trusts etc as something to buy without doing any research, but they can have their place as a diversifier in a broad portfolio (despite people saying they are at high values, which they are, relative to at other points in the economic cycle). So, as you start carrying out your research into what might fit in your portfolio to allocate your "way too much cash", they are an area to consider - albeit still seen as 'alternatives' to the mainstream stuff which people look at first.

Like bonds, the types of investments held by Infrastructure investors have their long term recurring cashflows which can be good when cyclical equities are falling in value, while they may become relatively less attractive in a rising interest rate environment.

But unlike bonds some types of infrastructure investments have reasonable inflation protection built into their revenues (eg utilities) and others have equity-like properties so they get busier when the economy is doing well (transport infrastructure, oil and gas transport/delivery etc) so don't get left behind as much as bonds might when the economy is growing. So, with a mix of different sub-sectors available, having a broad mix of underlying investments is key ; I hold both the ones mentioned (INPP has more overseas interests than HICL although the latter is starting to branch out). DYOR etc.

elephantrosie

longleggedhair wrote: »

I first purchased two REITS around 2009, for the same reasons you allude to (poor interest rates on cash) but at that times the yields were much higher. I piled in not for capital gain but for income which I always reinvested.

To my surprise the capital value significantly increased over those years in the trusts I held (F&C commercial and F&C real estate) to the point were they had become far too large a portion of my portfolio. I sold them a couple of months ago along with 90% of my equity holdings.

My feeling is that currently prices are too inflated and the only thing I can say is I see far more downside in the market than upside. Remember the saying "be fearful when others are greedy and greedy when others are fearful "

i agree REITS and shares prices are overinflated now. i am not buying any... with the exception of the shares and property equity as part of ETF.

La_Penardiere

I have found an 8% interest on £5000 from London Capital & Finance Plc which came up when I googled Martin Lewis savings tips. However I cannot see it on the MSE site. Has anyone invested with this company please?

EdGasketTheSecond

elephantrosie wrote: »

which platform are you using for yr REITS investment?

Any broker will do but x-o (Jarvis Securities) have the lowest charges at £5.95 per trade and no annual ISA charge.

bowlhead99

La_Penardiere wrote: »

I have found an 8% interest on £5000 from London Capital & Finance Plc which came up when I googled Martin Lewis savings tips. However I cannot see it on the MSE site. Has anyone invested with this company please?

No. But if you click above to search the forum you will see a whole bunch of threads over the last few years dedicated to them.

Basically there are a few unscrupulous websites which come up on Google searches as offering lists of the highest paying deposit accounts and then actually when you look at it is not a deposit or savings account at all, but an offer for you to invest in a bond. The bond is basically a loan made by you to LC&F, and they take the proceeds of that loan and go and make investments for themselves. If they don't go bust, they may have enough money to be able to pay you back the loan as intended with up to 8% interest on top. However if they are unsuccessful you might lose up to 100% of the £5000 you invest.

It should not be compared with bank deposit products and your money is not covered by FSCS if the investment fails or if one of the parties involved fails. They are not regulated by the FCA for taking customer deposits or for managing investments. The reason they have to offer 8% is that nobody in their right mind would lend them the money for less, because it is high risk. Personally I would want a higher return than 8% to invest in something like that. However some people are attracted by the high rates and frequently come on here asking about it because a high return sounds great if you don't realise there's a serious risk of losing your entire investment.

Better to stick to bank deposits or if you want higher returns on exchange for some risk, stick to regulated collective investment schemes (funds) or other stuff with a good track record and transparent reporting like ITs and REITs discussed on this thread and others like it.

steampowered

La_Penardiere wrote: »

I have found an 8% interest on £5000 from London Capital & Finance Plc which came up when I googled Martin Lewis savings tips. However I cannot see it on the MSE site. Has anyone invested with this company please?

Simply don't do it. It is a trap for the unwary. Stick with traditional investments - if in doubt, put your money into a low cost stock market tracker fund.

dunstonh

La_Penardiere wrote: »

I have found an 8% interest on £5000 from London Capital & Finance Plc which came up when I googled Martin Lewis savings tips. However I cannot see it on the MSE site. Has anyone invested with this company please?

It is a 100% capital at risk direct investment with no FSCS protection.

Whilst the investment is legit, the marketing of it is not. It appears on a number of unregulated sites with marketing that hides what it is. Often listing it with fixed term deposits and making out it is a fixed term deposit. These sites are not directly linked to L&C. However, L&C pay a referral fee should people sign up for the investment from those sites. Indeed, you could set up a website with a load of tosh on it and have that referral link.

In risk terms, it is a very high-risk investment that should not be marketed to retail consumers.

takesyourchances

With the new ISA season approaching, I am looking at my S&S ISA REIT holdings at the moment, I hold F&C Commerical Property, Tritax Big Box and Standard Life Property Income.



I was looking over other REIT's that may add something a bit different to what I have and have been looking at Primary Health Properties plc, any thoughts on this REIT as a bit if property diversification from the mostly commerical side from what I already hold?


I also hold hicl infrastructure which is property based too and I am going to top this up and also hold 3i infrastructure.



Thanks

doe808

takesyourchances wrote: »

With the new ISA season approaching, I am looking at my S&S ISA REIT holdings at the moment, I hold F&C Commerical Property, Tritax Big Box and Standard Life Property Income.



I was looking over other REIT's that may add something a bit different to what I have and have been looking at Primary Health Properties plc, any thoughts on this REIT as a bit if property diversification from the mostly commerical side from what I already hold?


I also hold hicl infrastructure which is property based too and I am going to top this up and also hold 3i infrastructure.



Thanks

I've held PHP for ten+ years now. I used to do a lot of work in that sector, and they always stood out for me in terms of their approach and the way they operated. One of only 3 or 4 individual 'companies' I hold. Possibly one of the most boring shares out there!



To be clear though, this is not investment advice and the shares have been on a very good run recently. Further, I have no idea how they would fit into your portfolio. Do your own research, as always.