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Property ISA's
Comments
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Have no thoughts on how much to invest in property but would say TM home investor which i had not heard of(but has had a name change recently) seems to be from a well known fund company and been around a while and doing ok but would note it seems to have quite high fees and a low yield so might not be a traditional choice of property fund for many0
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The past is the best guide we have to the future.Have you ever read anything that proved that?
No but in my life I have seen tons of evidence that patterns from history keep repeating themselves. Sometimes predictable events happen daily and other times less frequently. It is because these events are grounded in fundamental logic and circumstance which rarely change.
For example we keep hearing from investors burnt in tin pot little P2P, Property, etc investment schemes go belly up so it's seems a safe conclusion that it will keep happening. Given this market is fairly small anyway I categorize these as high risk. I have no problem investing a small proportion with an established property investor such as L&G, Aviva, etc.
We have seen many stock market crashes and corrections but I have never seen a diversified share portfolio go belly up in a way that wouldn't eventually produce a satisfactory result if held over a long enough period.
Alex0 -
OK so I'm going to summarise and address the key points:
Property funds are apparently
1. Less liquid?
This is not right because it depends on what you were planning to invest in.
They are more liquid that a BTL property that you buy yourself, but less liquid than stocks.
2. Much higher risk than a tracker fund since all investments in one company
I can't disagree with that. Hopefully someone does a property tracker fund of all the property funds one day.
However there are no examples cited in any posts of people losing money. Only example cited is PropertyMoose where money is locked, i.e. illiquid.
However, what this point completely misses is that stocks are more risky than property at the moment as, based on history, stocks are likely to drop by at least 40% in the next 3 years, whereas property is not.
3. Low returns
This is just an opinion on what will happen in the future. Personally I believe £100 in property will beat £100 in stocks at the point at which the stocks drop to 40% from their peak.
At which point one can switch to a higher stocks allocation.0 -
Property funds are apparently
1. Less liquid?
This is not right because it depends on what you were planning to invest in.
You are wrong. Property is illiquid. Indeed, the FCA is proposing they carry increased risk warnings and take action to suspend the fund much quicker than previously and more frequently.2. Much higher risk than a tracker fund since all investments in one company
Investing in a single sector is higher risk regardless of the asset type.I can't disagree with that. Hopefully someone does a property tracker fund of all the property funds one day.
There are property share fund trackers. Bricks and mortar trackers are unlikely unless you use synthetic replication.However there are no examples cited in any posts of people losing money. Only example cited is PropertyMoose where money is locked, i.e. illiquid.
Non-mainstream property funds have been failing on a regular basis for years. Even mainstream property funds suffered suspensions several times in the last 20 years.
Losses on unregulated and non-mainstream property funds are one of the larger concerns for the regulator. Hence why it is proposing increased levels of risk disclosure and internal management.This is just an opinion on what will happen in the future. Personally I believe £100 in property will beat £100 in stocks at the point at which the stocks drop to 40% from their peak.
Property is a different asset class which makes it useful for diversification. What makes you think property won't suffer a 40% drop? It did in the 90s.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 -
You are wrong. Property is illiquid.
Please explain why/how I'm wrong.
If I buy into a property fund like Bricklane, TM HomeInvestor, Aviva etc. etc. I can sell my shares no problem.
So are you the one who is wrong?Investing in a single sector is higher risk regardless of the asset type.
No-one is suggesting investing in a single sector so this is a non-point. We are simply comparing stocks vs the likes of bricklane, TM Home Investor.Non-mainstream property funds have been failing on a regular basis for years.
Examples please.Property is a different asset class which makes it useful for diversification. What makes you think property won't suffer a 40% drop? It did in the 90s.
UK prices dropped 40% in the 90s?
This chart says you're wrong.
https://tradingeconomics.com/united-kingdom/housing-index0 -
Please explain why/how I'm wrong.
I think you are just trolling us now as everyone knows property is illiquid
Even bricklane say the following:
If you want to sell shares, there is no guarantee that you will be able to find a buyer for your shares within a reasonable timeframe at a price that is acceptable to you. The REITs invest in residential property, which are not highly liquid assets. Rental yields and dividends may be lower than estimated.
Liquidity is less of a problem for investment trusts which invest directly in property, as these do not have to meet investor redemptions. However, when there are problems in the property market their share price falls and they tend to swing out to very wide discounts to net asset value (NAV), meaning their shareholders may not wish to sell at those levels. Property share funds are typically more volatile that both bricks and mortar funds and general stockmarket funds.If I buy into a property fund like Bricklane, TM HomeInvestor, Aviva etc. etc. I can sell my shares no problem.
That is incorrect. Bricks and mortar property funds can be suspended due to liquidity. A number suspended withdrawals in 2016 and 2008/9.
TM Homeinvestor carries the ability to suspend withdrawals as does Aviva and every other bricks and mortar property fund. This is why some people avoid the bricks and mortar property funds and use property share funds instead. Although, given the higher risk nature, they reduce the allocations to sensible levels.
I think we need to clarify whether you are talking about property share funds or bricks and mortar funds.UK prices dropped 40% in the 90s?
This chart says you're wrong.
https://tradingeconomics.com/united-kingdom/housing-index
In some areas yes they did. I was lucky enough to buy a property from someone that suffered a 35% loss. Some areas fell by less. Some more. I suggest you read about the house price crash of the 90s if you dont know anything about it.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 -
I think you are just trolling us now as everyone knows property is illiquid
Even bricklane say the following:
If you want to sell shares, there is no guarantee that you will be able to find a buyer for your shares within a reasonable timeframe at a price that is acceptable to you. The REITs invest in residential property, which are not highly liquid assets. Rental yields and dividends may be lower than estimated.
Liquidity is less of a problem for investment trusts which invest directly in property, as these do not have to meet investor redemptions. However, when there are problems in the property market their share price falls and they tend to swing out to very wide discounts to net asset value (NAV), meaning their shareholders may not wish to sell at those levels. Property share funds are typically more volatile that both bricks and mortar funds and general stockmarket funds.
That is incorrect. Bricks and mortar property funds can be suspended due to liquidity. A number suspended withdrawals in 2016 and 2008/9.
TM Homeinvestor carries the ability to suspend withdrawals as does Aviva and every other bricks and mortar property fund. This is why some people avoid the bricks and mortar property funds and use property share funds instead. Although, given the higher risk nature, they reduce the allocations to sensible levels.
I think we need to clarify whether you are talking about property share funds or bricks and mortar funds.
In some areas yes they did. I was lucky enough to buy a property from someone that suffered a 35% loss. Some areas fell by less. Some more. I suggest you read about the house price crash of the 90s if you dont know anything about it.
I am wondering if you understand English properly.
I said property is less liquid than stocks, but more than a BTL. BTL is illiquid so presumably you are dead against BTL?
You have still not provided any examples of all the property funds that went bust and everyone lost their money. Maybe you made that up?
Maybe you also made up the 40% house price crash in the 90s as you can't do a simple google and prove me wrong.
You're points are all just opinions. No facts.0 -
UK prices dropped 40% in the 90s?
This chart says you're wrong.
https://tradingeconomics.com/united-kingdom/housing-index
They certainly did. I lived through it unable to sell my house because it was in negative equity. Bought in 1989 for £60k, value in 1994 was £35k and sold in 1998 for £41k
Property crash in 1990s is a fact. Not an opinion. Just because you don't remember it doesn't mean it never happened.Maybe you also made up the 40% house price crash in the 90s as you can't do a simple google and prove me wrong.
You're points are all just opinions. No facts.
How about Sadly Broke aka Bradley Stoke
http://news.bbc.co.uk/1/hi/england/bristol/6227609.stmRemember the saying: if it looks too good to be true it almost certainly is.0 -
When someone says property prices crashed by 40% they mean the whole market. Just like when they say the stock market crashed by 40%.
Not one random property, not one random town, not one random stock or a group of stocks. The WHOLE market.
Nice trolling. Destroyed all your arguments so you resort to pretending to misunderstand.
Still no examples of all these many many alleged property funds where people have lost their hard earned money.
Maybe they are with the unicorns? Like the 1990s UK property market 40% drop? Like not being able to sell shares in property funds because they are illiquid? Like the low returns on property?0 -
When someone says property prices crashed by 40% they mean the whole market. Just like when they say the stock market crashed by 40%.
Not one random property, not one random town, not one random stock or a group of stocks. The WHOLE market.
By the same token which stocks, and what do you mean by the whole market? When they say the stock market has fallen 10%, do they mean FTSE100, FTSE All Share, S&P500, Nikkei? The "whole market" needs as much qualification as "property prices".
This link from the Guardian says the 90s crash was 20% across the whole of the UK. Reasonable to assume some areas were worse, others were better. Irrelevant what the actual number was in a whole market vs a local market, as the property funds do not invest in the whole market but rather will have specialties, for example commercial real estate. That will be separate from "UK whole of market residential prices" anyway.Still no examples of all these many many alleged property funds where people have lost their hard earned money.
Maybe they are with the unicorns? Like the 1990s UK property market 40% drop? Like not being able to sell shares in property funds because they are illiquid? Like the low returns on property?
https://citywire.co.uk/funds-insider/news/no-end-in-sight-for-trapped-ubs-property-fund-investors/a1111246
https://www.ftadviser.com/2016/07/27/investments/property/fscs-declares-propertybourse-in-default-mimcpv7Ve4IqupuN39VUaI/article.html
There's two for you at a quick google :beer:0
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