New build is worst buy-to-let investment, experts warn

[milanbenes]

well you don't buy shares to live in either

therefore I too am talking about shares against property from the investment perspective and not from the habitation perspective

hth

Milan.

[Euro-commuter]

Would that be a specific set of shares or would you have to be a market genius to get that kind of return?

You quoted Milan but I will suppose that you are asking me about the 11%.

That is the figure for the whole of the market. It includes re-investment of dividends, reasonably enough since if you don't do that, it's like spending the interest on your deposit account as it comes in - your savings will never compound.

The question then arises whether it is possible, and practicable, for an investor to equal (or even beat) the market. Personally, with figures that beat inflation, cash savings, and property comfortably in the long term, I'd be happy to equal it. You can do that these days with an ETF tracker. You can do better with a sensible portfolio: diversified collection of large companies with low P/E, little or no debt, good dividends. a history of rising dividends, and good dividend cover.


Edit: you don't have to be a genius to do as well as the market, but if you do, you will be regarded as one. This is because the majority of small investors come to enjoy trading, and do far too much of it, to the detriment of their wealth. (The situation is different for professional advisers and brokers: they encourage clients to trade, which is to the detriment of the clients' wealth but not their own. As one stockbroker said to the other in the marina, "where are the clients' yachts?").

[Euro-commuter]

well you don't buy shares to live in either

therefore I too am talking about shares against property from the investment perspective and not from the habitation perspective

hth

Milan.

then the fact that the phrase "as safe as houses" is a "well-known phrase or saying" is an irrelevance.

[milanbenes]

well I disagree, equities offer liquidity but there's more chance of an equity investment falling down than a property investment

Milan.

[Euro-commuter]

well I disagree, equities offer liquidity but there's more chance of an equity investment falling down than a property investment

Milan.

An equity investment, yes. A well-diversified portfolio, no.

Equities offer liquidity; with diversification, safety; and most importantly, a better return.

[lukemg]

My shares have given 13.2% per annum average return since 97 (across a range of pep/isa investments in unit trusts over the years since then) which is nice...Also - all these returns are tax free and don't even need to be declared on your tax return.
My house has gone up 16%/year since 2000.
Point is - spread the risk and the love...

[tim123]

Aye I accepted them alright - from my tenants who were paying my mortgages, like you are paying your landlord's

HTH

But that's because you got in at the right time.

Getting in now is IMHO stupid.

I can buy the flat that I am currently living in for 219,000 (plus a grand a year in service charges) or I can rent it for 780pm.

I don't see a problem with this rent "paying the landlord's mortgage interest". As long as it isn't contributing to the capltal cost (which it isn't) then this rent is not the 'lost money' that many people seem to think it is.

tim

[Euro-commuter]

But that's because you got in at the right time.

Getting in now is IMHO stupid.

I can buy the flat that I am currently living in for 219,000 (plus a grand a year in service charges) or I can rent it for 780pm.

I don't see a problem with this rent "paying the landlord's mortgage interest". As long as it isn't contributing to the capltal cost (which it isn't) then this rent is not the 'lost money' that many people seem to think it is.

tim

Quite so. Rent pays the landlord's mortgage interest; if you buy, you pay your own mortgage interest. 6/half dozen so far.

The (investement) advantage of owning is that this buys you not only a roof over your head, but also the chance to own the house in decades time, bought at today's price. If its value goes up, you're a winner. Speculation, IOW.

You could just as well rent (rent = interest), and invest the rest of what you would have paid in mortgage payments, in the stock market instead. Hence the question of which is the better return.


Incidentally, it seems to me that most discussions about property on here are not in any way an examination of whether it would be smart to invest in property now, but rather an opportunity for those who have already done so to point out how clever they are.

[BlasterBates]

10% is quite realistic for the stock market, but it is up and down. I invested in the late 90's. On average I earned 8% per year, but at one point my portfolio halved in value, it subsequently quadrupled, so you qon't earn a steady 10%, one year you could be up 50% the next down 50% etc etc.

The key to getting reasonable returns is not to invest everything at once but when the market does crash and you're 30% down, you need to buy more shares.

..ah one more point in my experience every 2 in 10 shares you buy are naff, and 1 or 2 are spectacular. I have a fund (Chile Fund) that is still half the value it was when I bought in the late 90's, but that doesn't matter. So diversify.

[AtW]

A quick glance on www.rightmove.co.uk shows quite a lot of 1-bedroom flats to rent for 600 in Birmingham. It also shows a lot of 4-bedroom houses to rent for 600.

It may well be that 1 bedroom flat is overlooking the canals in the city center and has no chance of letting, yet stupid landlord will keep advertising it - smart people will rent much bigger houses for the same price: people who want to live in one room would probably go for a studio which is much cheaper: <400 per month.

Figures show that over the long term, investing in property has generated a lower return than the stock market.

Just another example of bullcrap - ok, it is over long term, but can you spend 10 days under water without air? Creditors are not exactly prepared to wait long term in case of you having a problem with cashflow - you will be bankrupted pretty quickly, so point of long term is really only valid if you have got serious cashflow or reserves that allow you to weather the storm - most people don't have that, so those few who do can be ignored as they are statistically insignificant number (sadly).