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Invest in property or Stock Market?
Posted: 10 November 2016 14:49:08(UTC)

Joined: 10/11/2016(UTC)
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Hi there

Does anyone know whether its better to invest in property or the stock exchange?

I know property over the longer term is more lucrative but I was wondering over 5 years?

I live in farnham and have spoken to my local estate agents - - these guys tell me property is the best choice (they would). Is that correct?

Posted: 10 November 2016 19:12:10(UTC)

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If I could re-write my own investing history (which I am more or less happy with, even with the wonderful benefit of hindsight), I often wonder where I might have been today if I had invested in property when I started in the '90s.
I'll never know (and I'm not going to start now), but this doesn't answer your question.
Of course, you could invest in property VIA the stock market and cover both options - there are numerous (and various) property investing opportunities available, some of which are highly regarded (especially for income).
One obvious problem with investing directly in property is that you have no immediate access to your money.
Donald Chan
Posted: 13 November 2016 09:37:10(UTC)

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Steve, I don't have the definitive response to your question. However, your estate agent will ALWAYS have the answer.
Posted: 13 November 2016 10:26:52(UTC)

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When people compare stockmarket with property, it always seems to mean funds/shares Vs houses.

But the mechanics are totally different. Transactional and holding costs for houses are very high, sales are chunky and typically slow and most investors use very high gearing to boost their returns.
The gearing supercharges profits in a rising market, but can easily wipe you out if prices fall.
Tug Boat
Posted: 13 November 2016 11:12:50(UTC)

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This is an easy one for me. I recently moved house. I added up the costs, purchase, sale, maintenance etc. then subtracted this from the profit. Does not come close to the stock market. I also assumed divi and rent cancel out.

There are other issues, liquidity of stocks and the fact people don't live inside your stocks and shares are two big plus points.

Recently Redundant and Retired
Posted: 13 November 2016 11:23:52(UTC)

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Steve/Tom/Bob whatever. Best use the same name each time you post, don't duplicate posts and don't advertise Estate Agents. Otherwise, follow your gut feeling, do your own research (it's all out there in the ether) and never take advice from strangers, forums nor interested parties.
My most important bit of property advice: if you invest in property and end up with a 7m high, beamed drawing room, always fasten your shirt collar tight and keep your mouth closed when sweeping spiders and their webs from the ceiling with your extendable cobweb brush.
Big boy
Posted: 13 November 2016 16:05:21(UTC)

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Once you have your own residents you should diversify....don't have all you eggs in one basket however good that basket is. I have made money out of both. Be very careful about buy to let as heavily taxed and you can loose everything if geared and markets decline and interest rates rise. If you really wish to buy into residential property do it via Housebuilders shares within an ISA then free of CGT and Income tax. Also you are free to buy and sell when you wish. No way would I go near them at moment as much better investments elsewhere.
Powerful Pierre
Posted: 14 November 2016 22:42:39(UTC)

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As they say, "it all depends" ...
- whether you're investing spare cash or wish to take out a mortgage
- the current tax regime and your own tax position
- whether you're looking for capital growth or regular income (cash flow)
- how long you'd hold the investment (5 years sounds too short for property, given the costs and vagaries of the market)
- whether you wish to manage any BTL investments yourself or via an agent
- and hence the time you have available to manage these investments
- etc etc

Personally, my wife and I have invested in BTL, shares, funds/trusts via a platform, etc. The regular rental income from property is a nice adjunct to our pensions, plus the capital growth of property (at least until now).

So, it all depends!

1 user thanked Powerful Pierre for this post.
Jon Snow on 15/11/2016(UTC)
King Lodos
Posted: 14 November 2016 23:36:45(UTC)

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It surprises some people, but property values over the really long-term should only rise in line with inflation.

Of course we can have 30-40 year periods in which they rise much faster – but you can also have equally long periods of decline.

If you're good at outguessing the market, you can buy property in areas likely to benefit from increased demand in the future ... But like stocks, yesterday's winners can be tomorrow's losers, and as we've seen with things like Brexit, you can't always predict the events that dictate these trends..

Property's a great form of diversification however. The stock market and global economy could go down (and stay down) for a generation. But real assets still represent real value, and can provide a real income.
Jon Snow
Posted: 15 November 2016 00:47:13(UTC)

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Unfortunately for us mortals over the really long term we're all really dead.

I'm not sure where you get the data for very historic property prices from, all I know is what I have experienced with property since 1978, the only real down period was around 1990 to 1994 when "negative equity" was the talk of the town.

Logic would imply that house prices should increase by the rate of inflation in a situation where supply and demand are in balance.

In the UK that is not the case, housebuilders stockpile land and build only the amount they need to meet their sales and profit targets, councils don't really build houses anymore (see Newsnight tonight - personal observation, why don't councils build more houses). Also over the last few years net immigration has been greater than inflation.

I'd hazard a guess that you don't own a BTL because if you did you'd know about the never ending issues and problems associated with property (esp leasehold) the taxation of rental income and the CGT treatment of gains.

We seriously considered selling our rental properties last year (we could bank a decent profit and get a better yield) and we decided against it because a physical property is just that, pieces of paper and promissory notes are just "dust in the wind dude"

Would I invest in another BTL - no!

King Lodos
Posted: 15 November 2016 01:29:43(UTC)

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Jim Rogers is 74 and still invests on a longer time horizon than most 20 year-olds.. (My own Zen perspective is that we're in such a state of continual change, it's never really the same person waking up each morning – embrace the transience)

Since 1980 we've really had a very particular economic environment, which you can see reflected in the trend in interest rates (obviously)

I think the way you'd put is that trends in supply and demand are much more likely to be trends, and be cyclical, so the real long-term support for house prices is just plain old inflation.. I looked at a BTL a few years back, but realised the illiquidity, costs, etc. didn't make it ideal for my situation.. I've been quite happy with L&G's UK Property fund, with about the same rental yield I'd make.. But land could be a great thing to own when there's a $700tn derivatives bubble waiting to blow up.
Maz Smith
Posted: 19 December 2016 17:13:11(UTC)

Joined: 19/12/2016(UTC)
Posts: 6

estate agent always going to suggest the property market

property potentially more secure & more control

higher initial costs with property acquisition but more consistent return if structured correctly

property purchase & yield depends on initial deposit and equity

get proper advice - I'd always advise you speak to my FA and happy to give name and number if required.

we can always give free guidance on how to position the ownership legally
Ms Dislexic Landlord
Posted: 26 January 2017 10:23:03(UTC)

Joined: 17/10/2013(UTC)
Posts: 2

With the Taxation of BTL and stricter lending its a very hard call which is best
I as an old property investor would now pick the stock market
But I am lucky have the income to invest from BTL in the stock market
I would seek a lot of taxation advice before you invest in property
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