Is investing in property still the best long term option?

steampowered

chucknorris wrote: »

We've got about £4m invested in London property and about £2m in shares (for me personally it is now about 50/50 between property and equities), for us without any shadow of doubt, leveraged London property investment has massively (in no way could it be considered close) been the best investment over the last 25 years. The next 25 years may unfold differently, but there is no way that leveraged property in London was not the best investment. I'm not prepared to comment on other regions, because I have done no research, and have no knowledge about them.

This is not a fair comparison, because you are comparing a diversified investment with a non-diversified investment.

If you invest in non-diversified assets you can do very well or you can do very badly.

Think of it this way.

As you invested in London property over the last 15 years, you would indeed have done exceptionally well. You were fortunate enough to pick a sub-set of the property market that has dramatically outperformed the rest of the market.

If you had invested in a balanced portfolio of property nationally, you would not have done nearly so well.

If you had invested in property in Northern Ireland or Spain, you would have lost much of your investment. Or probably lost the entire investment if you had taken a BTL mortgage to fund it.

The same concepts apply to shares. If you had invested in Apple shares over the last 15 years, you would have had an investment return of about 1380%.

If you had invested in a diversified portfolio of shares over the last 15 years, you would have had a healthy average return but obviously nowhere near as much as if you had selected specific shares that outperformed the market.

jonnygee2

but surely with those I could put 20k in and in 10 years it be worth less?

It's highly unlikely but it is possible. The same is true of property, especially with a portfolio size of only two properties. Neither is a risk-free asset.

But essentially, the longer the investment span, the lower the risk. If you invest over 20 years in a diverse portfolio of equities then the risk is 'negligible'. (if you choose just one company and put 20k in it then yes your investment could well go down!).

Vanguard seems to be the one that some people use for equities. Or what I've read or YouTubed. Any other good reviews or experience?

Vanguard is a reasonable option for someone of your experience level. You can start by setting up a stocks and shares ISA for your 20k. Other platforms may charge less. I use iWeb, sorry I don't know how the two compare in terms of fees.

In terms of investments I would say if you wanted to invest in shares you would want to chose a managed 100% equity fund like this one .

But of course, I'm not a qualified financial advisor!

bostonerimus

The OP needs to read up a bit about equities and realize that real estate comes with risk too. There is also the enormous tax benefits of ISA and pension investments to be considered.

I think the OP should do what I did and split their money between real estate (paying off your own mortgage and maybe a rental too), pension and investing in equities and bonds outside of the pension.....so in the UK that would be in an ISA. Those three will be nicely complimentary and with a decent cash buffer can provide a good retirement portfolio.

chucknorris

steampowered wrote: »

Think of it this way.

As you invested in London property over the last 15 years, you would indeed have done exceptionally well. You were fortunate enough to pick a sub-set of the property market that has dramatically outperformed the rest of the market.

If you had invested in a balanced portfolio of property nationally, you would not have done nearly so well.

I wasn't fortunate, I specifically moved to London from Newcastle to invest in the London property because I had researched it, and decided to invest in that particular property market. Because it very much looked like a one way bet, and it certainly was.

As for London in particular, maybe you missed this:

EDIT:

chucknorris wrote: »

I'm not prepared to comment on other regions, because I have done no research, and have no knowledge about them.

Obviously you have to do your own research and invest where you see the returns, property markets are regional, so you have to be specific where you invest. My post was obviously limited to London property, which you either overlooked, or chose to ignore.

Thrugelmir

jonnygee2 wrote: »

But essentially, the longer the investment span, the lower the risk. If you invest over 20 years in a diverse portfolio of equities then the risk is 'negligible'. (if you choose just one company and put 20k in it then yes your investment could well go down!).

Average life span of a listed company is currently around 15 years. The world revolves at a much faster pace than years gone by.

enthusiasticsaver

I don't think property is a good investment. It is not tax efficient, it is very volatile in terms of value, it requires maintenance and lots of chances for things to go wrong if you rent it out like bad tenants, missed rent payments etc etc.

Equities and bonds can be spread geographically and sector wise and as Linton says you can liquidate much easier than you can with property. They can be held in tax free wrappers like ISAs and with SIPPs payments in can be topped up by HMRC depending on your tax rate.

Retireby40

Think il take abit longer to assess everything.

I think cause I see how easy things are with my current property and rental it seems a no brainer. I've good long term tenants, it's being managed and I am well in profit in terms of money in versus money out. Obviously things can go wrong but surely long term someone paying your mortgage is a certainty to at least make a half decent profit.

Who knows maybe I just need abit of a bad experience to make me think. Ah that's why everyone was saying maybe try equities.

fiisch

chucknorris wrote: »

Despite that I am shortly going to move out of property, mainly because it is a very long term investment, and I am now in my 60's, and also after almost 28 years, I am fed up being a landlord, my equities have never rang me up about a plumbing leak. I want less hassle during my retirement.

Equally you can't drive round to your equities and touch them! The tangible nature of BTL means that public perception typically views BTL as a "safe" option to gain investment returns, whereas equities are viewed as far more risky (although that's invariably because people think in terms of investing in individual companies rather than funds).

Personally, for my money, I have opted for the equities route. The tax changes on BTL mean it is very hard to make a decent return - not impossible, but you have to find the right property.

That said, my parents have just bought a BTL, as they absolutely cannot get their around the risk of investing in equities, yet view BTL as a safe option, presumably because they have seen property price booms throughout their adult lives...

kidmugsy

Somehow becoming a landlord who might soon be facing a Trotskyist government doesn't appeal much to me.

short_butt_sweet

kidmugsy wrote: »

Somehow becoming a landlord who might soon be facing a Trotskyist government doesn't appeal much to me.

well, i hope for your sake that you know more about personal finance than you do about politics.