Best passive income? Buy to let?

Albermarle

Living off dividends / rent / coupons / interest indefinitely sounds like nonsense to me.

The people who advocate very early retirement are usually of a certain type :
High salary jobs
Dual income no kids
Spend the best years of their life ( when still young ) scrimping & saving & investing
Retire at an unnaturally young age and HOPE that they can live off the investments for 45 years , if they don't die of boredom first

MaxiRobriguez

Albermarle wrote: »

Retire at an unnaturally young age and HOPE that they can live off the investments for 45 years , if they don't die of boredom first

Making an assumption working is fun, cathartic and/or healthy for you.

Working is mostly a waste of time. Most people only do it because they have to, in order to make income to match their expenditure. If someone manages to get into a position at any point in life whereby they don't need to work to meet expenditure and want to retire then fair play to them, I don't begrudge them that one bit.

The people who really do enjoy their jobs usually get paid next to nothing, because capitalism deems those sorts of jobs not as important as more lucrative roles.

Peter_Williams

Albermarle wrote: »

The people who advocate very early retirement are usually of a certain type :
High salary jobs
Dual income no kids
Spend the best years of their life ( when still young ) scrimping & saving & investing
Retire at an unnaturally young age and HOPE that they can live off the investments for 45 years , if they don't die of boredom first

Maybe.
But I've noticed an increasing number of ''internet gurus'' (polite term) trying to push the whole ''get rich quick'' nonsense in the past few years.
These schemes are usually some form of subletting (''Rent to Rent'') or binary options trading online.

jsinc

bearshare wrote: »

In my experience, using àn gent just adds work and delay,s, as well as costs. You just end up chasing the agent to chase the builder/tenant/supplier, instead of chasing them directly.. And don't expect them to check on the property once a tenant is in, ever.

Even the end of tenancy inventory check was a joke: they missed that the tenants had built a HUGE shed in the garden, as well as drilling holes all over the house to install Sky into 3 rooms.

Was more about extra people to deal with, quotes/work to check, trades mistakes and damage to correct, costs to record, returns to file, voids to wear, lower net yield etc. And personally some guilt at the damn prices for young working families. Increasingly think renting makes more sense than owning/letting out tbh (at the right price and with a decent landlord, subject to relative future taxation so maybe not in the UK) and just actually invest monies passively.

george4064

MaxiRobriguez wrote: »

Op:

1) If you've got any significant debts with high interest (like credit cards) you might want to consider using your savings to pay these off.
2) If not, use savings to put down as a deposit on your own house if you don't already have one. Avoid paying rent which is flushed money, pay off a mortgage instead.
3) If you're in a company which offers a workplace pension, it's probably best putting as much in as you can. Your company may match a certain percentage. Take the free money if it's offered. You may want to consider sacrificing more salary still because it comes with the benefit of avoiding tax at source.
4) Take control of your pension investment choices. Most people just end up in a default fund which is are typically designed to be low-risk rather than high-growth because most people will kick up more a fuss if the pot decreases in value. But it won't matter for you with 30 years to spare, get your investments in things which have greatest chance of growing.

This. OP needs to think about their objectives and financial goals, once these are set you will have some direction which will help you decide where to save/invest etc.

JoeyCos

Hi sorry for the late reply and thank you all for the great advice!

I will definitely be looking at increasing my pension pot this week.

I have always been wary of investing in property especially with the amount of ‘contrepenerus’ online which is why I posted on here so it’s great to hear everyone’s views which back up my suspicion.

I am very new to this so I understand there is a lot more for me to learn before making any decisions. I’m currently living at home with my parents and I have no intention of moving out soon. My income exceeds my expenditure and I know in future this will more or less level out (kids, wife, house etc) which is why I would rather put in work now maybe start a side business and/or look at different ways to invest my money for the future. I have paid off my loans and now I am left with extra money which is just sitting in the bank. (Although taking some benefits as it’s in a help to buy ISA pot). I will look at alternative ways to invest but if you can give any more advice for someone young who’s expenditure will likely increase in future than I will be very grateful.

JoeyCos

Albermarle wrote: »

The people who advocate very early retirement are usually of a certain type :
High salary jobs
Dual income no kids
Spend the best years of their life ( when still young ) scrimping & saving & investing
Retire at an unnaturally young age and HOPE that they can live off the investments for 45 years , if they don't die of boredom first

The idea of retiring early is only an ambition of mine, if I can’t achieve it then so be it. I don’t plan on living the next 20 years cutting out every coupon and never going on holiday.

Thrugelmir

JoeyCos wrote: »

I don’t plan on living the next 20 years cutting out every coupon and never going on holiday.

Good because you'll never get this time again. Live every day to the full.

bostonerimus

BTL is a great diversifier in a portfolio, but you must fully understand the numbers and also the risks and responsibilities of being a landlord. Once the mortgage is paid off then the rent will provide some regular income and the property should hopefully have some capital appreciation.

Apodemus

fiisch wrote: »

Read Financial Independence blogs (FIRE) - Mr Money Mustache is a great place to start...

Yes, these are indeed interesting places to start, but keep reminding yourself that they are largely US based and everything needs to be adapted to UK (if that is where you live).

One piece of advice I saw on MMM about buy-to-let was to never buy a property if you couldn’t rent it out for 1% of the purchase price per month. That perhaps works in (some parts of) the US market, but would rarely be achievable here in UK. Perhaps that is a good bench-mark for the return you actually need to realistically cover costs, but it also shows how different the two rental markets are and why you need to exercise caution on following US-based advice.