Investment & Investing

Ha, kind of unavoidable when discussing money to not say something GC worthy.

Reneuron finally starting to go up

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Following my youngest’s (4yo) diagnosis of autism (we have two daughters) and the somewhat shocking discovery that only 1 in 6 hold a FT job I’ve been trying to think how best we can provide for her future.
Does anyone have experience of property investment? Or a good source where I might find some reliable advice to balance against other investment options.

A lot of green in the last few days. Tempting to de-risk a bit at this point, would still generate some useful CGT losses to carry forward for future years.

Time for a small celebration after the Nutmeg ISA I opened 6 months ago has finally crept back up to its original value.

Am trying to forget about the unfortunate effects of inflation.

Does anyone have experience of property investment?

Can't help but think the ship has sailed on that one.

Interactive Investor.

I want to add cash. There's no debit cards showing so I add a debit card.
Now it suddenly shows the expired version of this debit card. Huh?
I try to change its details to reflect the newer card.

"your debit card has expired. Please use the 'update card' link to update your debit card.
unfortunately you can not update your debit card twice within a 30 day period."

Fucksake.

yeah ii is not what it promised to be, maybe I am not an advanced user

I still like the idea of putting money into residential property as a zero risk way of helping your offspring with a deposit on their first property.

Get a buy to let mortgage, putting down 25% on a property, and you get the value increase on the 100%, plus possibly a bit of a profit from the rent above the mortgage interest. So a modest 4% house price rise is actually a 16% return on the cash you put down.

When said child is ready to buy a house you’ve got them the perfect deposit gift. If house prices have gone up madly they’ll have a bigger deposit, if they haven’t it doesn’t matter as they can buy more easily.

The issue is the cost of stamp duty at the point of purchase, so you need a significant rise before you reach break even, but unlike fund management costs it’s a one-off so if you’re investing over a long period it can still work out well.

Depending which survey you believe house prices have gone up about 70% over the last 10 years. If you’d put a 25% /£40k deposit on an average £160k house you’d get back £112k now, a 280% return before you include any rental income. £40k on the FTSE 100 over that time would have given maybe 25% / £10k increase.

zero risk ... get a buy to let mortgage, putting down 25% on a property

Taking on personal recourse debt is never zero risk

£40k on the FTSE 100 over that time would have given maybe 25% / £10k increase.

If you include reinvested dividends (you aren't going to throw them in the sea) it's >100%. If you'd leveraged your FTSE 100 investment at 75% you'd have done even better...

The other factor is that BTL is not zero work. It's quite a bit of work and can be a lot of work if you don't get great tenants.

Index trackers don't call you when the boiler doesn't work, the shed roof is leaking, they don't illegally sub let rooms, move out unexpectedly, fail to pay rent on time etc etc.

If you'd leveraged your FTSE 100 investment at 75% you'd have done even better...

Well, yes, but can you even get that sort of borrowing?

And like your reinvested dividends my fictional investor could reinvest their rental income.

True true.

BTL debt has personal recourse so from a risk perspective it’s the same as clearing out the offset account on your primary residence to buy equities. Or portfolio margin loans (which do exist).

At current rental yields there really isn’t very much rent left when you take maintenance, voids, interest and taxes into account.

BTL debt has personal recourse so from a risk

Yes, sorry, I wasn’t clear. I meant no risk from the point of view of using the money to give to your child as a house deposit - if house prices rocket it works, if they don’t your child will find it easier anyway.

At current rental yields there really isn’t very much rent left when you take maintenance, voids, interest and taxes into account.

No, not immediately but rents go up over time too. Obviously recent tax changes and interest rate rises make it far less attractive but residential property done carefully remains a sensible thing if that’s what you fancy.

residential property done carefully remains a sensible thing if that’s what you fancy

I think the vast majority of people already have enough (or indeed too much) residential property exposure through their primary home.

if house prices rocket it works, if they don’t your child will find it easier anyway

Doesn't this assume that there is some "Goldilocks" scenario in which house prices crash but your child isn't affected by whatever cocktail of factors (interest rates, wages, unemployment) caused house prices to crash?

I sort of get the "natural hedge" point but I think it net adds risk rather than taking it away. Particularly when you contrast it to the generous tax incentives like Junior ISAs that you can use to save cash for your kids. £9k pa in one of those for 18 years and they will be just fine.

Dunno, having been there and done that it was a lot of work and stress for what ultimately were pretty average returns.

For any old fool to do really, really well at it they’d need to go back in time at twenty five years.

Got sent a £100 referral bonus code for Wealify in case anyone is interested

Potentially interested. I'll message you a bit later if it's still about.

Yep I don’t think there’s a limit to how many I can refer

Cheers, is there some qualifying criteria for it?

Have sent you the details

https://monevator.com/its-too-late-to-get-into-buy-to-let/

Someone's long term experience with numbers