Is property still the best investment?

mattyprice4004

Hello everyone,
I'm wondering, with the rise in P2P lending and managed investment companies such as Nutmeg etc, is property still the way to go?

I ask as I run a small business that I'll be winding up in the next few years, leaving me with around 250k in capital to invest or use otherwise.
I'll have no mortgage to pay, so having 'dry spells' etc isn't a worry really.

I was thinking a mixed portfolio of something like:
1 property (100k, £500 P/M after fees etc)
50k with Nutmeg on a high risk profile
50k with a P2P lender
50k left in a standard savings account, as an emergency / opportunity fund

Does this sound like even remotely close to what I should be aiming for?
I'd love input from people who have done anything remotely similar.

dunstonh

Is property still the best investment?

Was it the best before?

I'm wondering, with the rise in P2P lending and managed investment companies such as Nutmeg etc, is property still the way to go?

Nutmeg are doing nothing on the investment front that hasnt been available for decades. Apart from them losing an absolute fortune every year.

Does this sound like even remotely close to what I should be aiming for?

What are you aiming for? You have list a handful of solutions but not giving us the objectives you are trying to fill.

bostonerimus

What other assets do you have, how old are you and what do you want to accomplish. Property can be a good addition to a portfolio, but you must be aware of the costs and responsibilities of being a landlord.
Also Nutmeg doesn't seem to give you much for your money. I'd buy directly from someone like Vanguard and save money on fees.

mattyprice4004

Sorry, I should have been more clear.

I'll be around 30 when I go forward with this.
I own my own property already, no mortgage.

My aim is to be able to skim enough money to live off, or at least take the 'edge' off so I can have a low-responsibility part time job I can enjoy, rather than something high-pressure and high-earning.

AnotherJoe

If its got to last rest of your life, if fully invested and at 4% drawdown, the rule-of thumb "safe drawdown %, which would return £10k/year, it most likely wouldn't last.
Is £10k a year enough?

bostonerimus

AnotherJoe wrote: »

If its got to last rest of your life, if fully invested and at 4% drawdown, the rule-of thumb "safe drawdown %, which would return £10k/year, it most likely wouldn't last.
Is £10k a year enough?

At 30 you should plan for 60 or 70 more years....4% would be aggressive for that time period.

AnotherJoe

bostonerimus wrote: »

At 30 you should plan for 60 or 70 more years....4% would be aggressive for that time period.

Indeed it would, hence my saying it wouldn't last

Freecall

dunstonh wrote: »

Nutmeg are doing nothing on the investment front that hasnt been available for decades. Apart from them losing an absolute fortune every year.

And here's me naively thinking that it has always been possible to lose an absolute fortune every year.



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timeuk

Property was one of the top-performing asset classes of 2015, returning 13 to 14 per cent for the year – a significantly superior total return to that of other asset classes over the same period. Global growth is predicted to continue to ease during 2016; this follows a slowdown in 2015 to 2.7 per cent, down from 2.8 per cent in 2014. These numbers are all considerably below the Organisation for Economic Cooperation and Development (‘OECD’) historical average of 3.6 per cent. This is despite the consistent attempts to stimulate economies through various means, such as quantitative easing.

Bravepants

I think you should think 3% annual drawdown, particularly if you are getting a part time job.


How much do you need per month to live on?


I probably wouldn't put more than 10% of my assets into P2P. So let's say £25,000. Using a return of 10%, say, that should bring in roughly £200 per month.


£50k cash, lets assume interest rates are going to stay rubbish, say 5% max on £2.5k of that amount, say £10 per month income from that.


I assume 4.5% average growth for my ISA and AVC (being pessimistic, 5% average stock market growth minus 0.5% annual fees), so even a 3% drawdown does not keep up with inflation. But let's live with that.


So £175k drawn-down at 3%, brings £437 per month.


So total monthly income = £647 per month, or about £150 per week.


Property could be good, but you have to consider:


1. Void periods with no tenant
2. Tenants who don't look after your property
3. Maintenance and repair costs
4. Tenants who whinge constantly
5. Tenants who don't pay their rent
6. Costs for court fees for eventual eviction
7. Clean up costs once the tenant has been evicted

MEM62

As an accidental landlord I can vouch for the fact that property is not some magical cash cow or get rich quick scheme. In my case I have reasons other than financial for hanging onto my flat and renting it so I am OK with my situation. However, once costs and income tax are taken into account the returns are far from the levels that most people would imagine. (In my opinion most people grossly underestimate the levels of costs that are incurred)

I am not sure where the myth started that property is the best investment but it isn't. It may not be the worst but you need to be realistic in your expectations of the returns you will achieve.