Bricks and mortar if you can afford it is the soundest long term bet but most people can't afford the additional cost of a second house. If you do have tenants you need to decide if you are going to manage the property yourself or leave it in the hands of an agent.
I think I will invest in a mattress and put my spare cash under it....
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
Funnily enough, been looking at properties in North Yorkshire and Harrogate in particular.
Just to say the property bubble is not only in London. Harrogate is on the high side of home county prices.
Best property investment is currently as Bob has suggested - student accommodation, especially as they are not too particular! So many university towns now that you can pick and chose. Bear in mind that you don't get income in the summer though.
Actually I seem to. The letting agents seem to make them sign up for the whole year. Or if not, max one month gap. Have to sign the new contract so will double check, but its more or less continuous.
EDIT: yep, full year. Heaven knows how they argue that. But then all the money will go to helping pay my niece's fees at Loughborough. £27k. I mean WTAF?
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
Funnily enough, been looking at properties in North Yorkshire and Harrogate in particular.
Just to say the property bubble is not only in London. Harrogate is on the high side of home county prices.
Best property investment is currently as Bob has suggested - student accommodation, especially as they are not too particular! So many university towns now that you can pick and chose. Bear in mind that you don't get income in the summer though.
Actually I seem to. The letting agents seem to make them sign up for the whole year. Or if not, max one month gap. Have to sign the new contract so will double check, but its more or less continuous.
EDIT: yep, full year. Heaven knows how they argue that. But then all the money will go to helping pay my niece's fees at Loughborough. £27k. I mean WTAF?
That's rare, Richard - a typical shorthold tenancy for an academic year student rental is 10 months - typically payable in three installments of 4/3/3 months.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
Funnily enough, been looking at properties in North Yorkshire and Harrogate in particular.
Just to say the property bubble is not only in London. Harrogate is on the high side of home county prices.
Best property investment is currently as Bob has suggested - student accommodation, especially as they are not too particular! So many university towns now that you can pick and chose. Bear in mind that you don't get income in the summer though.
Actually I seem to. The letting agents seem to make them sign up for the whole year. Or if not, max one month gap. Have to sign the new contract so will double check, but its more or less continuous.
EDIT: yep, full year. Heaven knows how they argue that. But then all the money will go to helping pay my niece's fees at Loughborough. £27k. I mean WTAF?
From what I remember from my student days students need to pay each 4 months rent up front. Might differ from landlord to landlord but all the ones I dealt with had the same arrangement.
e.g. contract starts in July for 12 months. Say each student pays £50/week for a room, then they need to pay £867 in July, then in November then in March.
Of course it is a farce that landlords claim full rent despite the students not being there during the summer, however good luck finding a landlord honest enough to waive these months or to offer those months at a discounted rate accordingly.
If you don't already, have a listen to Pete Matthew's podcast from Meaningful Money. He is English so the content is aimed at an English audience, talks sense and more importantly talks in layman terms. It was voted UK podcast of the year for 2015
I have just discovered this podcast and downloaded the old ones back to the beginning of January 2016 however I have been so impressed I am thinking of going right back to number 1. I listen in the car and they only last 25 mins so they are easy to digest.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
In the meantime stick it in Premium Bonds, you won't lose anything and will more than likely win prizes that out perform any interest you'd get elsewhere. My wife and I have won £500 in prizes so far this calendar year between us.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
£200k would buy two three bed terraced houses in Hull or Stoke - both Uni towns that would give something like £900 per month each in rental income to students (around £300 per room). After letting agents fees/insurance/routine maintenance you would get c£600 per month for each property. Let for 10 months of the year = £12k net income (6% yield). The value of the property would rise steadily but by no more than 3 or 4 percentage points below national average (that would have been around 4% for Stoke in the last year). So net yield c10% and absolutely safe.
Assuming the experts are right in predicting a 10% fall in house prices in the next couple of years then what I'm suggesting would probably be best delayed - keep in cash until then.
I'm thinking of cashing out and moving the family to the west country. I want a big house with lots of land near good schools with some holiday let's on site (preferably) or if not a couple of standalone cottages near the beaches. Has anyone gone down this route? Am I being naive in considering putting all my eggs into this particular basket?
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
£200k would buy two three bed terraced houses in Hull or Stoke - both Uni towns that would give something like £900 per month each in rental income to students (around £300 per room). After letting agents fees/insurance/routine maintenance you would get c£600 per month for each property. Let for 10 months of the year = £12k net income (6% yield). The value of the property would rise steadily but by no more than 3 or 4 percentage points below national average (that would have been around 4% for Stoke in the last year). So net yield c10% and absolutely safe.
Assuming the experts are right in predicting a 10% fall in house prices in the next couple of years then what I'm suggesting would probably be best delayed - keep in cash until then.
I'm thinking of cashing out and moving the family to the west country. I want a big house with lots of land near good schools with some holiday let's on site (preferably) or if not a couple of standalone cottages near the beaches. Has anyone gone down this route? Am I being naive in considering putting all my eggs into this particular basket?
We always try and grab a week in Cornwall at some point in the year and on most occasions we like to stay in self catering cottages so we are free to come and go. I have got to know a lot of owners doing this most of which all live in the SE so I would say if your properties are up to scratch you will have no trouble renting them out. Living down there will be a bonus.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
£200k would buy two three bed terraced houses in Hull or Stoke - both Uni towns that would give something like £900 per month each in rental income to students (around £300 per room). After letting agents fees/insurance/routine maintenance you would get c£600 per month for each property. Let for 10 months of the year = £12k net income (6% yield). The value of the property would rise steadily but by no more than 3 or 4 percentage points below national average (that would have been around 4% for Stoke in the last year). So net yield c10% and absolutely safe.
Assuming the experts are right in predicting a 10% fall in house prices in the next couple of years then what I'm suggesting would probably be best delayed - keep in cash until then.
I'm thinking of cashing out and moving the family to the west country. I want a big house with lots of land near good schools with some holiday let's on site (preferably) or if not a couple of standalone cottages near the beaches. Has anyone gone down this route? Am I being naive in considering putting all my eggs into this particular basket?
Not at all naive - if it's the lifestyle you desire and the figures stack up then no reason not to do it.
However, I moved my family from Kent to rural Cheshire in 2007, we live in a big rambling barn conversion with land and, not that it affects us now, the schools are very good (but they were also very good in Kent). I'm looking to retire in the next few years and the first thing we will do is sell-up and head south again.
That's us, it doesn't mean that it would apply to you of course - just a word to the wise really.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
£200k would buy two three bed terraced houses in Hull or Stoke - both Uni towns that would give something like £900 per month each in rental income to students (around £300 per room). After letting agents fees/insurance/routine maintenance you would get c£600 per month for each property. Let for 10 months of the year = £12k net income (6% yield). The value of the property would rise steadily but by no more than 3 or 4 percentage points below national average (that would have been around 4% for Stoke in the last year). So net yield c10% and absolutely safe.
Assuming the experts are right in predicting a 10% fall in house prices in the next couple of years then what I'm suggesting would probably be best delayed - keep in cash until then.
I'm thinking of cashing out and moving the family to the west country. I want a big house with lots of land near good schools with some holiday let's on site (preferably) or if not a couple of standalone cottages near the beaches. Has anyone gone down this route? Am I being naive in considering putting all my eggs into this particular basket?
Have you thought of France before it's too late?
Property prices are about 70% of what you'd pay in the South East. Loads with holiday lets on site as well.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
Long-term investment - bricks and mortar.
Still have my UK house. Eggs in baskets, and all that...
Anyway, people are lary about property too, had that conversation this morning. British mate out here has 200k to invest, wondered if he should do what you just suggested. 200k won't get him anything in the south east, will it? Outside the south east, where to buy property that you would be confident will hold value. Somebody suggested Harrogate to him.
£200k would buy two three bed terraced houses in Hull or Stoke - both Uni towns that would give something like £900 per month each in rental income to students (around £300 per room). After letting agents fees/insurance/routine maintenance you would get c£600 per month for each property. Let for 10 months of the year = £12k net income (6% yield). The value of the property would rise steadily but by no more than 3 or 4 percentage points below national average (that would have been around 4% for Stoke in the last year). So net yield c10% and absolutely safe.
Assuming the experts are right in predicting a 10% fall in house prices in the next couple of years then what I'm suggesting would probably be best delayed - keep in cash until then.
I'm thinking of cashing out and moving the family to the west country. I want a big house with lots of land near good schools with some holiday let's on site (preferably) or if not a couple of standalone cottages near the beaches. Has anyone gone down this route? Am I being naive in considering putting all my eggs into this particular basket?
Have you thought of France before it's too late?
Property prices are about 70% of what you'd pay in the South East. Loads with holiday lets on site as well.
Part of the attraction of the west country rather then France is that my other half's Dad lives in Cornwall and he isn't getting any younger. Also having young kids makes me worry about setting up from scratch in another country. In a perfect world I'd kill to be running Gites in the Dordogne and enjoying the French way of life and maybe that's something I can look again at when I'm a bit older.
Buying a property to let is not investing in bricks and mortar, it's investing in a relatively unreliable income stream using an asset that absorbs unquantifiable future expenses to maintain its cash generating power. It is illiquid and capital values are no less volatile than investing in equities or bonds, they just move in different cycles. Plus side is, people understand their investment.
it is a market affected by complex interaction between house prices, mortgage rates, geographical differences in supply and demand. and unlike other investments you have to insure it and spend money to keep it in good order. Risks include vacancy, default, dilapidation of the asset, increased costs for agents and statutory improvements to tenancy obligations and rights.
Bonds default risk is comparable to the default/vacancy risk in a buy to let, but how is it factored into the pricing of a buy to let? If bought in the market priced as owner occupied housing stock it isn't, you pay market price of the house, not the market price for its risk adjusted rental yield. So you need to match your property with a price that matches your yield expectations, that's a task in itself if you don't know how to properly measure the appropriate risk premium. Any chav can buy a bond and can't do anything to mess it up, not the same can be said for tenants renting an investment property.
I would suggest that the credit rating of corporate borrowers measured for setting a yield is more robust than an estate agents credit check on a private tenant with a new default risk being exposed every time the tenancy changes. A corporate bond has one entity for the duration with one default exposure.
If a corporate bond portfolio gives a lower return than a buy to let property it is for good reason, it is a safer income stream with the risk premium factored in by the market and rendered manageable by way of diversification. If you can show me an investment with spectacular returns I will show you an investment with spectacular risks.
A buy to let portfolio is concentrated and exposed to vacancy and default risks far higher and less well managed than any bond portfolio. The capital appreciation/loss on a bond portfolio is driven by prevailing interests rates and inflation, the same ones that affect house prices and rents. There is nothing guaranteed in bricks and mortar any more than there is in the value of a corporate bond portfolio.
In truth, many people are happier taking the risk themselves and managing it poorly than having a third party manage risks well on their behalf regardless of the costs.
It's a risk that can be rewarded and it's worked well for many but it's naive to think property is a one way bet without risks.
Overpaying a mortgage at relatively high interest rates makes considerable sense, especially if you are a higher-rate taxpayer. For example overpaying a 4% mortgage is equivalent to earning 6.67% in a savings account for a 40% taxpayer and entirely risk-free (though you won't easily have access to the cash further down the line if you need it).
However doing the same thing on a 0.99% mortgage is far less appealing since it implies a risk-free savings account equivalent of just 1.65% even for a 40% taxpayer. Despite some of the quite correct caution regarding other investment alternatives (eg. P2P, corporate bonds, dividend equities etc.), that is a pretty low hurdle to get over.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
In the meantime stick it in Premium Bonds, you won't lose anything and will more than likely win prizes that out perform any interest you'd get elsewhere. My wife and I have won £500 in prizes so far this calendar year between us.
it's not possible to stick my SIPP money in Premium Bonds. The SIPP is still active, it is just currently in cash after I switched provider. But I am starting to think you are right, in that I might as well switch money into PBs from my cash savings account, which will doubtless soon be paying virtually nothing. PB's will pay virtually nothing too, I have never won more than £100 and must have had some for 20 years, but at least there is the chance...
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
In the meantime stick it in Premium Bonds, you won't lose anything and will more than likely win prizes that out perform any interest you'd get elsewhere. My wife and I have won £500 in prizes so far this calendar year between us.
it's not possible to stick my SIPP money in Premium Bonds. The SIPP is still active, it is just currently in cash after I switched provider. But I am starting to think you are right, in that I might as well switch money into PBs from my cash savings account, which will doubtless soon be paying virtually nothing. PB's will pay virtually nothing too, I have never won more than £100 and must have had some for 20 years, but at least there is the chance...
Sell all the PB you have and buy as many as you can in a block.
I'm sure statistically it makes no difference, but how many time have you been one or two numbers it in a raffle?
I know a Charlton fan who had his full allocation and used to sell the lot every year and buy a fresh block each year. He always felt the more recent numbers were picked by ERNIE.
Paying down debt (i.e. mortgage) is usually the best avenue unless you can comfortably earn more, safely, with your cash.
if you have a mortgage and cash in the bank take a look at an offset mortgage. I have one and due to the amount offset my interest per month is single figure pounds, i.e. it's pretty much all offset.
Premium bonds are safe, but ignore all the hype around recent tickets etc. The reason more recent tickets win is there are a lot more of them!
Re property, it depends what you are looking for, outside of London you will see a better yield but over a period a much lower capital appreciation (in 8 years mine has doubled, whereas my sister in Nottingham is up maybe 20% at a push). Achieving 10% yield is relatively easy in many northern cities, assuming you can keep it rented and have no issues, student lets for Uni are a good way to go. Richard if your niece is going to Loughborough why not buy one there? Would help her and also you.
I can't fathom why anyone would do a BTL at the moment in London, high cost, high fee's (stamp etc) for a low yield and a gamble on house prices which in my view will correct over the coming couple of years, particularly in the SE which has seen the large gains.
Richard, your SIPP in cash is wasting away, you need to do something. Choose some funds and trickle it in over the next 12 months, not sure when you 'cashed' in but most people will have seen good gains the past 6 months or so. Choose 7-8, mix it up from UK Equity, EU, US etc, cash, bonds and so on. Just watch those in foreign currencies as many have climbed due to the exchange rate.
@Covered End is worried about corporate bonds, and I am not going to argue with him.
Equity markets are barrelling upwards when most expected a post Brexit slump. Probably driven by the sentiment that there is nowhere else to put all this money.
Gold. Well not for me thank you. This sodding fund is (was) my worst ever investment, unless you include my CAFC plc shares, which I considered a duty rather than an investment.
Seriously. If you have cash now (I liquidated my SIPP holdings) what would you do? Sit out and see how the markets pan out until year end?
In the meantime stick it in Premium Bonds, you won't lose anything and will more than likely win prizes that out perform any interest you'd get elsewhere. My wife and I have won £500 in prizes so far this calendar year between us.
it's not possible to stick my SIPP money in Premium Bonds. The SIPP is still active, it is just currently in cash after I switched provider. But I am starting to think you are right, in that I might as well switch money into PBs from my cash savings account, which will doubtless soon be paying virtually nothing. PB's will pay virtually nothing too, I have never won more than £100 and must have had some for 20 years, but at least there is the chance...
Sell all the PB you have and buy as many as you can in a block.
I'm sure statistically it makes no difference, but how many time have you been one or two numbers it in a raffle?
I know a Charlton fan who had his full allocation and used to sell the lot every year and buy a fresh block each year. He always felt the more recent numbers were picked by ERNIE.
We cash our older one's in occasionally and then buy new ones. It shouldn't theoretically make a difference but you would normally see a few wins in the initial six months or so. The point is though that although it's a lottery and there is no guarantee of winning a prize you are getting next to nothing elsewhere so it's not exactly as if you are losing anything by doing so.
Isn't there a waiting period before the Honda you have bought are eligible for a prize? If that's the case and if (as is claimed) ALL bonds have an equal chance then selling older bonds and buying new ones wouldn't be a good idea. Ps does anyone know of anybody who has won the £1million prize?
Isn't there a waiting period before the Honda you have bought are eligible for a prize? If that's the case and if (as is claimed) ALL bonds have an equal chance then selling older bonds and buying new ones wouldn't be a good idea. Ps does anyone know of anybody who has won the £1million prize?
Yes.
Someone who used to post on Netaddicks. Someone who has posted on this thread knows them very well
Isn't there a waiting period before the Honda you have bought are eligible for a prize? If that's the case and if (as is claimed) ALL bonds have an equal chance then selling older bonds and buying new ones wouldn't be a good idea. Ps does anyone know of anybody who has won the £1million prize?
Don't think you can use a Honda to purchase bonds but yes you sit out one draw so if you are going yo invest leave it until about the 25th of the month so that the transaction goes through before the end of the month, you sit out the draw on the 1st and then will be in the draw the following month.
I'm afraid I don't have enough cash to buy a place in Loughborough or anywhere, the 200k discussion above is for a mate. Interesting thought though, may discuss with family.
I had to cash out my SIPP holdings a couple of weeks before Brexit with FTSE 100 at just over 6300, in order to move it to H-L, and then it took much longer than promised to go through because these providers all work to low standards of professionalism and integrity. Anyway by the time it was all sorted, FTSE was at 6700. I just don't think that level is sustainable and there will be a fall before the end of the year. So I would rather wait and work out exactly what mix of funds to best choose - see the earlier discussion on the bond market, which I don't well understand. I could indeed feed it in monthly, but I am not rushing to start. Something else will spook the markets and then they will also notice that Brexit is bad news for both the UK and other economies, and I would expect to be back at 6300 or less. Just my feeling. Could be wrong. But if I am, then we are heading for record global index highs. Does the global economy justify that?
Buying a property to let is not investing in bricks and mortar, it's investing in a relatively unreliable income stream using an asset that absorbs unquantifiable future expenses to maintain its cash generating power. It is illiquid and capital values are no less volatile than investing in equities or bonds, they just move in different cycles. Plus side is, people understand their investment.
it is a market affected by complex interaction between house prices, mortgage rates, geographical differences in supply and demand. and unlike other investments you have to insure it and spend money to keep it in good order. Risks include vacancy, default, dilapidation of the asset, increased costs for agents and statutory improvements to tenancy obligations and rights.
Bonds default risk is comparable to the default/vacancy risk in a buy to let, but how is it factored into the pricing of a buy to let? If bought in the market priced as owner occupied housing stock it isn't, you pay market price of the house, not the market price for its risk adjusted rental yield. So you need to match your property with a price that matches your yield expectations, that's a task in itself if you don't know how to properly measure the appropriate risk premium. Any chav can buy a bond and can't do anything to mess it up, not the same can be said for tenants renting an investment property.
I would suggest that the credit rating of corporate borrowers measured for setting a yield is more robust than an estate agents credit check on a private tenant with a new default risk being exposed every time the tenancy changes. A corporate bond has one entity for the duration with one default exposure.
If a corporate bond portfolio gives a lower return than a buy to let property it is for good reason, it is a safer income stream with the risk premium factored in by the market and rendered manageable by way of diversification. If you can show me an investment with spectacular returns I will show you an investment with spectacular risks.
A buy to let portfolio is concentrated and exposed to vacancy and default risks far higher and less well managed than any bond portfolio. The capital appreciation/loss on a bond portfolio is driven by prevailing interests rates and inflation, the same ones that affect house prices and rents. There is nothing guaranteed in bricks and mortar any more than there is in the value of a corporate bond portfolio.
In truth, many people are happier taking the risk themselves and managing it poorly than having a third party manage risks well on their behalf regardless of the costs.
It's a risk that can be rewarded and it's worked well for many but it's naive to think property is a one way bet without risks.
OK so to simplify your advice I would be well advised to hedge my exposure to a holiday let downturn by investing in bonds as well? This isn't my area of expertise what kind of returns am I getting on bonds in such a low rate environment?
Something else will spook the markets and then they will also notice that Brexitis bad news for both the UK and other economies, and I would expect to be back at 6300 or less. Just my feeling. Could be wrong. But if I am, then we are heading for record global index highs. Does the global economy justify that?
I'm sure your 'feeling' six weeks ago was suggesting the FTSE would be down to 5000 by now.
Something else will spook the markets and then they will also notice that Brexitis bad news for both the UK and other economies, and I would expect to be back at 6300 or less. Just my feeling. Could be wrong. But if I am, then we are heading for record global index highs. Does the global economy justify that?
I'm sure your 'feeling' six weeks ago was suggesting the FTSE would be down to 5000 by now.
5700 actually. And still would not be surprised if it hits that level by year end, although something other than just Brexit will push it there.
Those 'professionals' at RBS told their customers on 11 February this year to "sell everything". I though they were being ridiculous, but set myself a trading band of "sell at 6500, buy back at 5500".
Something else will spook the markets and then they will also notice that Brexitis bad news for both the UK and other economies, and I would expect to be back at 6300 or less. Just my feeling. Could be wrong. But if I am, then we are heading for record global index highs. Does the global economy justify that?
I'm sure your 'feeling' six weeks ago was suggesting the FTSE would be down to 5000 by now.
5700 actually. And still would not be surprised if it hits that level by year end, although something other than just Brexit will push it there.
Those 'professionals' at RBS told their customers on 11 February this year to "sell everything". I though they were being ridiculous, but set myself a trading band of "sell at 6500, buy back at 5500".
The thing is, all the while you are out of the market, you are missing the dividends. A quick back of the envelope jobbie, indicates that over six months, that's worth around a 120 point variation in the Index at the mid-point of your buy/sell band.
Something else will spook the markets and then they will also notice that Brexitis bad news for both the UK and other economies, and I would expect to be back at 6300 or less. Just my feeling. Could be wrong. But if I am, then we are heading for record global index highs. Does the global economy justify that?
I'm sure your 'feeling' six weeks ago was suggesting the FTSE would be down to 5000 by now.
5700 actually. And still would not be surprised if it hits that level by year end, although something other than just Brexit will push it there.
Those 'professionals' at RBS told their customers on 11 February this year to "sell everything". I though they were being ridiculous, but set myself a trading band of "sell at 6500, buy back at 5500".
The thing is, all the while you are out of the market, you are missing the dividends. A quick back of the envelope jobbie, indicates that over six months, that's worth around a 120 point variation in the Index at the mid-point of your buy/sell band.
Good point. Thanks for that calculation too. Probably need to start slowly feeding the cash back in, rather than waiting for an arbitrary point on the chart to be breached.
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I think I will invest in a mattress and put my spare cash under it....
EDIT: yep, full year. Heaven knows how they argue that. But then all the money will go to helping pay my niece's fees at Loughborough. £27k. I mean WTAF?
e.g. contract starts in July for 12 months. Say each student pays £50/week for a room, then they need to pay £867 in July, then in November then in March.
Of course it is a farce that landlords claim full rent despite the students not being there during the summer, however good luck finding a landlord honest enough to waive these months or to offer those months at a discounted rate accordingly.
I have just discovered this podcast and downloaded the old ones back to the beginning of January 2016 however I have been so impressed I am thinking of going right back to number 1. I listen in the car and they only last 25 mins so they are easy to digest.
http://meaningfulmoney.tv/
However, I moved my family from Kent to rural Cheshire in 2007, we live in a big rambling barn conversion with land and, not that it affects us now, the schools are very good (but they were also very good in Kent).
I'm looking to retire in the next few years and the first thing we will do is sell-up and head south again.
That's us, it doesn't mean that it would apply to you of course - just a word to the wise really.
Property prices are about 70% of what you'd pay in the South East. Loads with holiday lets on site as well.
it is a market affected by complex interaction between house prices, mortgage rates, geographical differences in supply and demand. and unlike other investments you have to insure it and spend money to keep it in good order. Risks include vacancy, default, dilapidation of the asset, increased costs for agents and statutory improvements to tenancy obligations and rights.
Bonds default risk is comparable to the default/vacancy risk in a buy to let, but how is it factored into the pricing of a buy to let? If bought in the market priced as owner occupied housing stock it isn't, you pay market price of the house, not the market price for its risk adjusted rental yield. So you need to match your property with a price that matches your yield expectations, that's a task in itself if you don't know how to properly measure the appropriate risk premium. Any chav can buy a bond and can't do anything to mess it up, not the same can be said for tenants renting an investment property.
I would suggest that the credit rating of corporate borrowers measured for setting a yield is more robust than an estate agents credit check on a private tenant with a new default risk being exposed every time the tenancy changes. A corporate bond has one entity for the duration with one default exposure.
If a corporate bond portfolio gives a lower return than a buy to let property it is for good reason, it is a safer income stream with the risk premium factored in by the market and rendered manageable by way of diversification. If you can show me an investment with spectacular returns I will show you an investment with spectacular risks.
A buy to let portfolio is concentrated and exposed to vacancy and default risks far higher and less well managed than any bond portfolio. The capital appreciation/loss on a bond portfolio is driven by prevailing interests rates and inflation, the same ones that affect house prices and rents. There is nothing guaranteed in bricks and mortar any more than there is in the value of a corporate bond portfolio.
In truth, many people are happier taking the risk themselves and managing it poorly than having a third party manage risks well on their behalf regardless of the costs.
It's a risk that can be rewarded and it's worked well for many but it's naive to think property is a one way bet without risks.
However doing the same thing on a 0.99% mortgage is far less appealing since it implies a risk-free savings account equivalent of just 1.65% even for a 40% taxpayer. Despite some of the quite correct caution regarding other investment alternatives (eg. P2P, corporate bonds, dividend equities etc.), that is a pretty low hurdle to get over.
I'm sure statistically it makes no difference, but how many time have you been one or two numbers it in a raffle?
I know a Charlton fan who had his full allocation and used to sell the lot every year and buy a fresh block each year. He always felt the more recent numbers were picked by ERNIE.
Done very well since brexit and I work there
if you have a mortgage and cash in the bank take a look at an offset mortgage. I have one and due to the amount offset my interest per month is single figure pounds, i.e. it's pretty much all offset.
Premium bonds are safe, but ignore all the hype around recent tickets etc. The reason more recent tickets win is there are a lot more of them!
Re property, it depends what you are looking for, outside of London you will see a better yield but over a period a much lower capital appreciation (in 8 years mine has doubled, whereas my sister in Nottingham is up maybe 20% at a push). Achieving 10% yield is relatively easy in many northern cities, assuming you can keep it rented and have no issues, student lets for Uni are a good way to go. Richard if your niece is going to Loughborough why not buy one there? Would help her and also you.
I can't fathom why anyone would do a BTL at the moment in London, high cost, high fee's (stamp etc) for a low yield and a gamble on house prices which in my view will correct over the coming couple of years, particularly in the SE which has seen the large gains.
Richard, your SIPP in cash is wasting away, you need to do something. Choose some funds and trickle it in over the next 12 months, not sure when you 'cashed' in but most people will have seen good gains the past 6 months or so. Choose 7-8, mix it up from UK Equity, EU, US etc, cash, bonds and so on. Just watch those in foreign currencies as many have climbed due to the exchange rate.
Ps does anyone know of anybody who has won the £1million prize?
Someone who used to post on Netaddicks. Someone who has posted on this thread knows them very well
I'm afraid I don't have enough cash to buy a place in Loughborough or anywhere, the 200k discussion above is for a mate. Interesting thought though, may discuss with family.
I had to cash out my SIPP holdings a couple of weeks before Brexit with FTSE 100 at just over 6300, in order to move it to H-L, and then it took much longer than promised to go through because these providers all work to low standards of professionalism and integrity. Anyway by the time it was all sorted, FTSE was at 6700. I just don't think that level is sustainable and there will be a fall before the end of the year. So I would rather wait and work out exactly what mix of funds to best choose - see the earlier discussion on the bond market, which I don't well understand. I could indeed feed it in monthly, but I am not rushing to start. Something else will spook the markets and then they will also notice that Brexit is bad news for both the UK and other economies, and I would expect to be back at 6300 or less. Just my feeling. Could be wrong. But if I am, then we are heading for record global index highs. Does the global economy justify that?
Those 'professionals' at RBS told their customers on 11 February this year to "sell everything". I though they were being ridiculous, but set myself a trading band of "sell at 6500, buy back at 5500".