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Is property still the best investment?
Comments
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AnotherJoe wrote: »That was then and this is now.
But he was responding to my post, which was in turn responding to a 'then' post (not now). I did actually also cover 'now' though, and pointed out the current disadvantages, which would put me off.Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
Remember that every asset class has hot spots and failures. London property is priced on the international stage and was in high demand. Other parts of the country have seen little movement in the best part of a decade. Most fall somewhere in between.
Same applies to investments.
We also have to look at the driving forces behind these things. The credit boom started in the 70s. It accelerated until the credit crunch. Mass immigration and becoming the most populated country in Europe (England, rather than UK in that respect) pushed up prices. So, for a limited period of several decades, property did have a boom. Is that going to be the same for the next few decades?
I just can't see much future capital gain (over inflation) in London property, and given the recent changes, I think shares look the better option now, for new investors. Nothing wrong in staying in property with low/no mortgages though.Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
Hello all,
Thank you all so much for your input - it's very useful, and gives me something to mull over.
I have no pension as of yet, but I'm only in my 20s so plenty of time to change that if needed.
Property was always my first thought, but I'm well aware of the risks associated with being a landlord - that'd need some careful consideration.0 -
mattyprice4004 wrote: »
Thank you all so much for your input - it's very useful, and gives me something to mull over.
I have no pension as of yet, but I'm only in my 20s so plenty of time to change that if needed.
If you are not paying into a workplace pension or something like NEST you are missing out on the free money of the employer contributions and years of tax free compounding growth. I would start your pension and an ISA immediately.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
mattyprice4004 wrote: »I have no pension as of yet, but I'm only in my 20s so plenty of time to change that if needed.
It doesn't quite fit with thinking retirement is decades away but it's actually the opposite - with compounding returns the earlier you start the less you have to pay in.
You could pay in £100 per month between the ages of 21 and 30 and will have more pension than if you pay in the same between 30 and 70. The longer you leave it the more you have to pay to catch up.
http://www.telegraph.co.uk/finance/personalfinance/investing/10742396/When-saving-for-10-years-pays-more-than-saving-for-40.htmlRemember the saying: if it looks too good to be true it almost certainly is.0 -
I have no pension as of yet, but I'm only in my 20s so plenty of time to change that if needed.
Only in your 20s? Is that 20 or 29?
At 20, you should be looking to start now. At 25, you are already seeing the impact of starting late and need to pay more than you would have done at 20. At 29, you are quite a late starter and would be needing to pay around 2-3 times more than you would have had you started just 5-8 years earlier.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
bostonerimus wrote: »At 30 you should plan for 60 or 70 more years....4% would be aggressive for that time period.
Why? 4% was chosen because there has never been any point since 1920 where drawing 4% resulted in someone running out of money in a 30 year period and it works out that there's very little difference between 30 years and 60 years or even an infinite period. And don't forget that at some point in the future they will receive the State Pension which will have a massive impact to their withdrawl rate and as the OP aid they intend to do a bit of part time work.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
We also have to look at the driving forces behind these things. The credit boom started in the 70s. It accelerated until the credit crunch. Mass immigration and becoming the most populated country in Europe (England, rather than UK in that respect) pushed up prices. So, for a limited period of several decades, property did have a boom. Is that going to be the same for the next few decades?
Any discussion on UK property shouldn't overlook the planning system and the green belt in particular. This has had effect of severely limiting the supply of building plots0 -
Why? 4% was chosen because there has never been any point since 1920 where drawing 4% resulted in someone running out of money in a 30 year period and it works out that there's very little difference between 30 years and 60 years or even an infinite period. And don't forget that at some point in the future they will receive the State Pension which will have a massive impact to their withdrawl rate and as the OP aid they intend to do a bit of part time work.
Of course historical US stock and bond returns might not be the best data to use for someone retiring in to a BREXIT Britain so 4% is seen as optimistic by many in today's economy because of the potential for 10 years of poor bond returns. I think you'll find the probability of success with an inflation adjusted 4% withdrawal for 30 years is far higher that that for 60 years.
If other sources of income begin that can reduce the withdrawal rate than that's great.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
You need to consider leverage.
Leverage is why lots of people love property investment and find equities disappointing. If you had £50k to invest in 1997, no bank would lend you £150k to put £200k in the stock market. But they would lend you £150k to put £200k in the property market. So even though equities have outperformed property over most time horizons, it's much easier for a small investor to make big profits in property. Indeed, the property market is almost the only leveraged exposure available to small investors, which is why, in an era of economic prosperity and secular falls in interest rates which made almost every productive asset class a great investment, it was the most beloved.
By the same token, it's also much easier to lose your shirt. The falling price of agricultural land in the late 19th century caused massive political upheaval because all those farmers found themselves on the sharp end of leverage. I hope we don't get a repeat.0
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