Where to put inheritence?

Anonymous101

Personally I think that buying a property and letting it out is more risky than investing in stocks and shares. As others have said buying index linked funds which spread your investment across the whole of a market, or multiple countries / markets, are much more straightforward and require much less effort than investing in property.

atush

bigadaj wrote: »

You often quote pound cost averaging but that only works if that is when the money becomes available, for example from salary.

Because stock markets generally rise then if money is available the probability is that a lump sum investment will outperform a monthly investment.

While this is perfectly true, you dont understand why I recommend it often.

I tend to recommend it to new and emotional investors who would be horrified to invest on the first of June and see a huge stock market correction by July. By not investing all at once, they are less likely to have that happen (and then sell in a panic therefore making a paper loss an actual loss).

My father died in the summer of 1987. My mother invested the life insurance in Sept 1987. And you know what happened in Oct 87? Luckily she wasnt an emotional investor (although it was a very sobering experience for her to lose so much so soon) and she didnt sell. And it did recover in time.

atush

Originally Posted by ~FlowerPot~ View Post
I am failing to see that investments would give the same returns, even with changes afoot.

In studies of all assets incl gold and property back to 1900, equities outperformed property. And cash and gold.

AndyT678

atush wrote: »

In studies of all assets incl gold and property back to 1900, equities outperformed property. And cash and gold.

But the attraction of property is the ability to leverage. You can get 100% of the capital gain and 100% of the income after finance costs by putting in 25% of the asset value.

Try finding a bank that'll lend you £75,000 secured against £100,000 of your favourite S&S investment.

Eco_Miser

AndyT678 wrote: »

But the attraction of property is the ability to leverage. You can get 100% of the capital gain and 100% of the income after finance costs by putting in 25% of the asset value.

Try finding a bank that'll lend you £75,000 secured against £100,000 of your favourite S&S investment.

But the OP intends to buy outright.

atush

Not to mention you can leverage with equities- Investment trusts

AndyT678

Eco_Miser wrote: »

But the OP intends to buy outright.

Yes that was clear and I would agree that on that basis it's a poor option but with a 75% mortgage it might not be.

atush wrote: »

Not to mention you can leverage with equities- Investment trusts

Again yes but not to the same extent. I'm no expert in investment trusts but I haven't seen gearing limits of more than about 80%. It's a long way off the 300% that's easily achievable in BTL.

I'm not advocating BTL by the way; I think it's a relatively high risk ball ache that most people can do without. I just think it's a little disingenuous to simply say equities outperform property and that's the whole story.

Malthusian

AndyT678 wrote: »

Again yes but not to the same extent. I'm no expert in investment trusts but I haven't seen gearing limits of more than about 80%. It's a long way off the 300% that's easily achievable in BTL.

Just take out a mortgage on your existing property and invest it in stocks and shares. (And no, I'm not advocating it.) Depending on the investor's credit history and assets it may be more expensive or difficult than BTL, but it's certainly achievable.

Or use booster ETFs.

atush

atush wrote: »

In studies of all assets incl gold and property back to 1900, equities outperformed property. And cash and gold.

In the Sunday Times money section they posted the results of a new study from 2008 to now. In all cases, in all parts of the country, pensions (being equity based but with other assets too) outperformed property in % increase.

Even in London, property rose 50%, but pension wealth of those who live in london rose 52%.

Other standouts were the northwest- property down 1%, pension wealth up 69%, Southwest property up 22% pension wealth up 92% etc.

AndyT678

atush wrote: »

In the Sunday Times money section they posted the results of a new study from 2008 to now. In all cases, in all parts of the country, pensions (being equity based but with other assets too) outperformed property in % increase.

Even in London, property rose 50%, but pension wealth of those who live in london rose 52%.

Other standouts were the northwest- property down 1%, pension wealth up 69%, Southwest property up 22% pension wealth up 92% etc.

Sorry, maybe I'm being thick but I think I need some more explanation on that one.

Ignore the property vs pension bit to start with and just take the pension numbers. To me, it suggests that if Mr Average had £10,000 invested in pensions in 2008 he would now have either £15,200, £16,900 or £19,200 depending on whether he lived in London, Liverpool or Bristol. Why?

Are they suggesting that wurzels are better stock pickers than city boys? Or does it include contributions made during the period as well as investment returns?

If it does include contributions then I don't see how it's fair to compare it just to the capital gain in a different asset class.