Is investing in property still the best long term option?

Prism

chucknorris wrote: »

Plus all the dividend income paid, or did you base your figures on an accumulation tracker? (I guessed not).

Thats including dividend reinvestment. You can try out some scenarios here

https://dqydj.com/sp-500-return-calculator/

System

chucknorris wrote: »

Plus all the dividend income paid, or did you base your figures on an accumulation tracker? (I guessed not).

The total return index includes reinvested dividends. The gain is in dollars so does not take account of the depreciation of sterling that was about $1.6 in 1997. This would increase the gain.

chucknorris

bearshare wrote: »

I think it was the 'for us' part of your original message that was missed. If that was YOUR best performing investment, then there is no argument.

But you WERE lucky, and it IS like comparing a undiversified investment with a diversified one. No matter how much research you do beforehand,, you are still have much more risk due to unforseen events: Brxxxt? Labour not allowing eastern European migrants in 2 years earlier than required? Pollution controls causing businesses to move out of London? A Corbyn government?

If you look at it like that, the returns on shares and anything else would have been lucky too. I analyse potential investments to find value, rather than guarantee success, there are no guarantees in life, either (or both) of us could die tomorrow, or even later today. But hopefully neither of us will.

By the way, I don't think Labour allowed Eastern Europeans in until about 13 years after I invested, by then I was already home and dry.

The thread subject is about investment property (i.e. an undiversified investment), however my overall investment portfolio is diversified.

steampowered

chucknorris wrote: »

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.

I agree entirely. I think you have misunderstood the point I am making.

The point I am making is that selecting specific sectors or regions is always a higher risk approach.

You can certainly do your research but you can never be sure how a particular property or share or region or sector will perform. I am sure all of the people who lost money on Northern Irish or Spanish property did their research too.

The point is that if you choose your specific sector or region correctly, you will do very well. If you select badly, you will lose money. You cannot guarantee which way it will go.

That is why comparing London property over the past 15 years with a balanced portfolio of shares is an unfair comparison.

A fairer comparison would be London property (a subset of the property market which has outperformed the rest of the market) with, for example, technology company shares (a subset of the stock market which has outperformed the rest of the market).

With your London property you were more concentrated (and therefore taking more risk) than on your share portfolio - I am assuming here that your share portfolio was diversified rather than for example only buying technology shares or mining shares.

The risk you took by focussing on the London market worked out well for you, but it could easily have gone the other way ! And certainly there is no guarantee that the parts of the country which did well over the last 15 years will do as well over the next 15 years.

chucknorris

steampowered wrote: »

I agree entirely. I think you have misunderstood the point I am making.

The point I am making is that selecting specific sectors or regions is always a higher risk approach.

You can certainly do your research but you can never be sure how a particular property or share or region or sector will perform. I am sure all of the people who lost money on Northern Irish or Spanish property did their research too.

The point is that if you choose your specific sector or region correctly, you will do very well. If you select badly, you will lose money. You cannot guarantee which way it will go.

That is why comparing London property over the past 15 years with a balanced portfolio of shares is an unfair comparison.

With your London property you were more concentrated (and therefore taking more risk) than on your share portfolio - I am assuming here that your share portfolio was diversified rather than for example only buying technology shares or mining shares.

The risk you took by focussing on the London market worked out well for you, but it could easily have gone on the way. It is entirely possible that someone who tries to copy you today by buying London property will find that their investment has not done so well over the next 15 years.

I agree, but I was responding to someone who was asking about property versus other assets, and also questioning the comparison historically:

_CC_ wrote: »

"Still the best long term option" - when was it ever the best long term option?

Have you looked into other asset classes and tax implications to compare?

I wouldn't invest in property now, even if I was in my 30's, especially in London, the scenario is entirely different, when I invested:

London property was extremely cheap (early 90's)
Capital gains were index linked
Mortgage interest was allowed as an expense against HRT
There was no additional stamp duty
There was a very generous wear and tear allowance

In about 3 years I will probably only have a half share in one investment property (with my wife), all mine will be sold.

Thrugelmir

Prism wrote: »

I haven't got stats for the global market but as an example if you had invested 31k in the US S&P in 1976

That was 44 years ago. How many people had a sum of that magnitude to invest back then. Nor was it that easy to buy overseas stocks either.

atush

reeac wrote: »

We bought a house in late 1976 for £31k and sold it in 1998 for £334k. Our present place cost around £120k in 1997 and is now worth about £450k. All gains tax free. Could the stock market beat that?

yes, it could esp if you are cherry picking.

kidmugsy

Thrugelmir wrote: »

Nor was it that easy to buy overseas stocks either.

But presumably it was easy to buy those Investment Trusts that invested overseas - Alliance, F&C, Witan, and so forth.

kidmugsy

Apodemus wrote: »

At the time this was a “sure thing” with guaranteed returns and you were on-site to manage the properties. That was fine until WW1, Rent Control and depression, when the BTL model went horribly wrong.

And yet there was a twit who posted just above you who seems to think that the idea of a government confiscating property rights (as the old Rent Act did) is inconceivable.

atush

reeac wrote: »

We bought a house in late 1976 for £31k and sold it in 1998 for £334k. Our present place cost around £120k in 1997 and is now worth about £450k. All gains tax free. Could the stock market beat that?

Plus if you hadnt deselected and actually read the rest of my post I did say that the most profitable property investment would be your own home.