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Rental Income or Dividends?

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  • Steve182
    Steve182 Posts: 623 Forumite
    Fourth Anniversary 500 Posts Photogenic Name Dropper
    edited 9 March 2021 at 9:47PM
    6% annual growth/return from equities is by no means unachievable. S & P 500 has achieved 10.6% average TR with dividends reinvested over the past 50 years and 6.6% adjusted for inflation over the same timeframe.

    That timeframe includes the horrendous 70's, .com bubble, financial crisis etc.

    That's not to say that feat will be repeated, and the S & P may not necessarily be the best performing index over the next 5 decades, but personally I don't think 6% TR is an unrealistic long term target for reasonably well diversified global equities.

    I would not to get too obsessed with dividends or income, over the past few years growth shares have produced higher returns than dividend shares, you just need to top slice to achieve the required income.


    “Like a bunch of cod fishermen after all the cod’s been overfished, they don’t catch a lot of cod, but they keep on fishing in the same waters. That’s what’s happened to all these value investors. Maybe they should move to where the fish are.”   Charlie Munger, vice chairman, Berkshire Hathaway
  • thegentleway
    thegentleway Posts: 1,094 Forumite
    Tenth Anniversary 500 Posts Photogenic Name Dropper
    edited 9 March 2021 at 9:56PM
    Also,  the thought of having everything in the markets seemed kinda scary. 
    Isn’t it more scary to have everything concentrated in one property in one location? At least with the markets you can diversify (including property).
    No one has ever become poor by giving
  • chiang_mai
    chiang_mai Posts: 225 Forumite
    Seventh Anniversary 100 Posts Combo Breaker
    Thanks everybody.  I should have clarified that I wouldn't be relying upon rental income alone, but a mixture of dividends, savings and rent. 

    I was trying to ensure a mix of income streams, but my instincts are that property would be more hassle than is worth so was looking for thoughts on the comparing the two. I wouldn't look to buy property for this but given I already own it I was thinking it might be do-able. Also,  the thought of having everything in the markets seemed kinda scary. 

    A lot to think about!
    I pay a real estate agent 10% of the rent to manage all aspects including rent collection. I also pay a one off fee of about 150 Pounds to find the tenant and go through  the vetting and contracts process. All I have to do is pay the bills, or if I'm lucky, bank any profit.
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