Has the market peaked?

thepurplepixie

Conrad wrote: »

I own a modest commercial property and it's noticeable now how incredibly short the supply of commercial is, at least within a 50 mile radius of me. So much of it here has been turned over to residential - this is why I was saying commercial was a good bet a couple of years ago when lots of people were saying the opposite.




Mind you I don't think I'd invest all in one company - remember what happened to Frank Skinners entire fortune invested in an insurance company......

What happened to Frank Skinner?

economic

GreatApe wrote: »

Out of interest why did you go for British Land rather than one of the other REITs or a mix of REITs?

Hopefully British Land will do well for you, having another quick look at their accounts it shows that the NAV is 915p which means you are buying £1 of property for 69p. Assuming the valuations are not wrong then the share price will move up else the company should start divesting properties which should reduce the gap of 69p to the £1

I am tempted myself. However I am younger than you and so I dont know if its worth investing in less stable share price companies and risking more specifically on companies such as google apple tesla with the hope that one of them will be the ones to bring out the first commercial successful self drive AI which could drive their profits sky high.

i would say a balance of both defensive and growth and high risk growth stocks is the way to go simply for sanity.

i bought amazon myself last year. wish i bought more tech stocks. i looked further down the supply chain at semiconductors for opportunities but they have already gone up a lot as well. i am waiting for a dip before i buy into some of these. the ones i am considering are:

AAPL, GOOGLE, TESLA
AAOI, FNSR, NVIDIA

amateur_house

westernpromise wrote: »

What is happening is that you are finding out the real market value of your labour. If you thought it was higher than this, you'd quit, and you'd be able get another job on the previous money. As that's not happening, the unavoidable inference is that you were and perhaps still are overpaid, at taxpayers' expense.

This is true. I have been applying for other jobs for the past 10 years, but got nowhere. A lot of interviews but there is always someone else who has more experience etc.
I don't earn very much so the taxpayer shouldn't lose too much sleep. I have tried to get a second job stacking supermarket shelves at weekends and evenings and can't even get an interview! It would mean losing my working tax credit if I earned enough in a second job, but I would prefer to be self-supporting.

GreatApe

BTL rates have fallen even further, just as I suspected with less landlord demand the price of landlord mortgages has fallen.

The biggest lender, BM Solutions is now offering mortgages for 2.24% fixed for 5 years or 2 year fixes for as low as 1.69% Lower rates also mean a lower impact of S24

Despite this landlord demand will be lower going forward simple due to the +3% stamp duty and the current negative sentiment around property

What I find amazing is that I can borrow cheaper than a large UK Reit which has only 30% gearing.......very tempted to go on a 5 year fix as the mortgages come to the end of their fixed periods.

GreatApe

chucknorris wrote: »

I signed up with HL a while ago to be notified of new launches, I must have dismissed/overlooked this the first time they notified me. But yesterday they sent me a reminder saying I had until noon today to invest, I am unsure what to do.

A few weeks ago I moved all my SIPP and ISA from VUKE (ftse 100 etf) into cash, currently the market is 2% higher than when I sold (oops!). So I do have £395k available, and currently earning nothing. So I am torn between:

1. Investing all the £395k.
2. Invest a small part of it (£50 to £100k), and possibly top up if the secondary market ends up cheaper.
3. Invest across a spread of REITS.
4. Do nothing and wait for the market to fall, although it feels like I have lost something, I haven't as for the last 6 moths I have been selling on highs, and buying back in at lows, but this is the first time that I might get back in before the quarterly ex-dividend date of 22 June (although the election may bring some volatility.

Overall I like the idea of investing in commercial property, my wife wants to buy one or two shops and has asked me to invest with her, but I like the idea of a passive fund, with liquidity and diversity.

Because REIT dividends are taxed at normal marginal income tax rates (40% to me, rather than 32.5% dividend rates), if I do invest, it is better for me to do so within a tax wrapper, so given that my ISA and SIPP are currently in cash, it seems like an opportunity.

The information that I lack is:

a) Is there going to be strong demand for this, and keep the secondary price high, I have no experience of this, maybe I am better off just investing a small amount, and spreading the rest in other REIT's.

b) HL don't seem to have made it clear (or I have overlooked it) what the ongoing fees/charges (from HL or the REIT itself (including the spread price) are for holding this with them, I'm going to ring them this morning.

c) I am not entirely clear what is the difference between holding a REIT compared to an ETF? Is the secondary market price more or less the same as the price of an ETF varying, i.e. simply supply and demand, or is there something about a REIT that makes it less desirable for people to invest later (after it has been launched).

I think I need to bring forward my pension and ISA investments or at least make sure I top up the ISA every year. In the past I've removed sums from ISAs to fund property purchases etc losing the tax wrapper. I think If I recall correctly you noted one of your own mistakes was not to make more use of ISAs and pensions


As you note a residential or commercial property in ones own name will be taxed at 40-45% while shares in a pension or ISA are not taxed.

£100k in property at 5% will only net 2.75% post tax (even less on residential due to the S24). Plus large stamp duty taxes means you will be paying £1.05 for £1 of property.

£100k in a REIT in an ISA with a 4.6% yield will net 4.6% plus if annual accounts are to be believed you will only need to pay 70p for £1 of Property.

I think I am at the end of my residential property investment journey. Like you I have done well from it. My plan was to just pay down debt from now on but with debt so cheap I think filling the pension and ISAs might be better for now. Or even just spend more of it but I'm a boring person with cheap hobbies.

chucknorris

GreatApe wrote: »

Out of interest why did you go for British Land rather than one of the other REITs or a mix of REITs?

Hopefully British Land will do well for you, having another quick look at their accounts it shows that the NAV is 915p which means you are buying £1 of property for 69p. Assuming the valuations are not wrong then the share price will move up else the company should start divesting properties which should reduce the gap of 69p to the £1

I am tempted myself. However I am younger than you and so I dont know if its worth investing in less stable share price companies and risking more specifically on companies such as google apple tesla with the hope that one of them will be the ones to bring out the first commercial successful self drive AI which could drive their profits sky high.

First of all, I am definitely not an expert, but nevertheless I worked down a list of REITs and British Land stood out to me. I was originally intending to invest in about 3 or 4. But the others didn't seem to be as good, so I ended up thinking that I would be deworsifying rather than diversifying. The others had the following characteristics which I didn't like:

- Too specialist (not enough diversification)
- Yield too low
- Not large enough (limiting diversification)

chucknorris

GreatApe wrote: »

I think I need to bring forward my pension and ISA investments or at least make sure I top up the ISA every year. In the past I've removed sums from ISAs to fund property purchases etc losing the tax wrapper. I think If I recall correctly you noted one of your own mistakes was not to make more use of ISAs and pensions


As you note a residential or commercial property in ones own name will be taxed at 40-45% while shares in a pension or ISA are not taxed.

£100k in property at 5% will only net 2.75% post tax (even less on residential due to the S24). Plus large stamp duty taxes means you will be paying £1.05 for £1 of property.

£100k in a REIT in an ISA with a 4.6% yield will net 4.6% plus if annual accounts are to be believed you will only need to pay 70p for £1 of Property.

I think I am at the end of my residential property investment journey. Like you I have done well from it. My plan was to just pay down debt from now on but with debt so cheap I think filling the pension and ISAs might be better for now. Or even just spend more of it but I'm a boring person with cheap hobbies.

It is only the CGT keeping me invested in residential property, I have two 3 bedroom flats that I would have to make about 7% (I say about because unfortunately my other laptop just died and I can't access certain files for now) return on the equity released after paying CGT. I think the other 2 bedroom flat is much less at about 5%, so I will sell that when the tenants move out (although they do look well settled). I will probably keep the 3 bedroom flats for a while longer.

I've always topped up my ISAs including using my wife's allocation in SS ISAs when you had to have separate SS and cash ISAs. Although when she did warm to them and SIPPs, she bought them off me (they were obviously in her name anyway). I was a bit slower with SIPPs though. In fact, I didn't like pensions at all until I was 52, then I suddenly realised that they were a good hedge against living much longer than you expected (back when you couldn't easily drawdown and expected to have to buy an annuity). Of course they are much better value now with the recent flexibility introduced. I did buy the maximum allowed (£6,200) additional pension in the TPS (Teachers' Pension Scheme) though. When I join the new revised TPS scheme in August 2020 I can buy more, which I will definitely do, they pay about twice what annuities do, so they are excellent value.

My hobbies are very cheap too (lawn bowls, jogging, cycling, swimming, hiking, walking, cinema, chess, backgammon and catching up with friends). In fact, I almost consider working (one day a week) as sort of a hobby, I definitely prefer doing it to not doing it.

I'm also quite likely to start volunteering at our local wildlife hospital as an animal carer:

http://www.cylex-uk.co.uk/reviews/viewcompanywebsite.aspx?firmaName=the+wildlife+aid+foundation&companyId=13112464

economic

GreatApe wrote: »

I think I need to bring forward my pension and ISA investments or at least make sure I top up the ISA every year. In the past I've removed sums from ISAs to fund property purchases etc losing the tax wrapper. I think If I recall correctly you noted one of your own mistakes was not to make more use of ISAs and pensions


As you note a residential or commercial property in ones own name will be taxed at 40-45% while shares in a pension or ISA are not taxed.

£100k in property at 5% will only net 2.75% post tax (even less on residential due to the S24). Plus large stamp duty taxes means you will be paying £1.05 for £1 of property.

£100k in a REIT in an ISA with a 4.6% yield will net 4.6% plus if annual accounts are to be believed you will only need to pay 70p for £1 of Property.

I think I am at the end of my residential property investment journey. Like you I have done well from it. My plan was to just pay down debt from now on but with debt so cheap I think filling the pension and ISAs might be better for now. Or even just spend more of it but I'm a boring person with cheap hobbies.

better to invest then pay down debt. how old are you? in 20 years the debt would be small even if you didnt pay down the capital.

i didnt invest in property apart from my own home. i wish i did but i guess thats hindsight. i was pretty late in understanding of investments and how being all in cash is bad (which i was until 5 years ago).

GreatApe

economic wrote: »

better to invest then pay down debt. how old are you? in 20 years the debt would be small even if you didnt pay down the capital.

i didnt invest in property apart from my own home. i wish i did but i guess thats hindsight. i was pretty late in understanding of investments and how being all in cash is bad (which i was until 5 years ago).

I am close in age to yourself, so I could be invested for as much as 35 years.
That is the sort of time frame where stocks are in theory meant to beat everything else.

economic

GreatApe wrote: »

I am close in age to yourself, so I could be invested for as much as 35 years.
That is the sort of time frame where stocks are in theory meant to beat everything else.

i like how you said in theory.

i am not convinced its a 100% certainty stocks will beat everything else or even come close.

in that time frame you could have wars, communist governments coming in, nuclear bombs wiping out a lot of the popultation, so so so many things can potentially happen albiet some very unlikely and others unlikely.

in the thousands of years of history of markets (currency, commodities, tulips etc), we only have a very limited history of stocks. whos to say there wont be something else to replace it?